Analyzing The Appliciation & Pricing Of Convertible Bonds In China

Through working at the Investment Banking of China galaxy securities company limited for several months, the author has got some experiences in issuing convertible bonds in Chinese security market and wants to analyze the reason for quickly increase in Chinese convertible bonds market and the pricing of convertible bonds in Chinese security market. The article includes four chapters. First, the review of Chinese convertible bonds market, second, the analysis of quickly increase in Chinese convertible bonds market, third, the analysis of the pricing of convertible bonds in Chinese security market and in the end, the conclusion. The second and third chapters are the key chapters in this article. In the second chapter, the author analyzes the reason for the quickly increase in Chinese convertible bonds market from two aspects: the issuers' point of view and the investors' point of view. General speaking, the article analyses the difference among the three refinancing methods used in the public company, the microenvironment in Chinese security market, the self character of convertible bonds and the creative clause of convertible bonds. In the third chapter, the author calculated the pure bond-value, used the Black-Scholes model to calculate the derivative value of 5-years maturity convertible bonds issued in Chinese security market in 2003 and sum up the two values to get the total value of 5-years maturity convertible bonds issued in Chinese security market in 2003.In the end, the author analyzes the market price of Chinese convertible bonds and explains the reason for the difference between the market price and the price in theory.