Convertible Bond Terms Of Design And Market Development Research

Convertible bond is a security between stock and debt, which has great flexibility because of its options, equity-likes and debt-likes. Convertible bond has a gigantic market share in the world. In our country, though as a new original, it develops very quickly. Based on our current situations, to popularize it will do many benefits to our capital market, so, I choose the topic "research on the convertible bond provisions design and market development" as my degree article.For healthy development of convertible bond market, we should resolve provisions' problems. Because how to design provisions will have great impact on issuances and conversions. Besides, corporate can control those provisions by itself, so it has much practicality. This article thinks that there are too many imitations but too little innovation. In designing provisions, there is lack of enough Scientifics and flexibility. For example, many companies designed the convertible bond with the forced convert provisions, so it is not "may" convert, but "must" convert. To a certain degree, it hurts inventors' benefits, and interrupts the development of our capital market. As to our issued convertible bonds, there are too many similar terms, too much imitation, too little differential design, which show that corporate has not made full use of different terms to satisfy it self s need. Those terms show that the issuers want to translate stocks quickly, which are in favor of C.B holder but not in favor of old shareholders. There are many reasons, including issuer, market rate, the variation of stock, the development of market, law regulations, and so on. As far as issuers concerned, they are in great lack of cash and don't want to pay back the principals and interests, so they make C.B terms just like stock. Under such conditions, outstanding shareholders are the major victims.In order to make full use of this financial instrument, issuers should make proper terms according to self s conditions and needs. This article refers International practice and our current law, and gives out my own opinions.Besides provisions, this market exists some other problems: too small market scale, too rigid issuing regulations, some companies' bad purposes, and so on. Now we have entered WTO, and our financial markets are changing better and better. So, author advises our government, issuer, investor, and some other agents changing theirminds, controlling overall risks, strengthening investor protection system, making practical law system, to get our convertible bond market's sustainable, rapid, healthy development.