Study On Some Problems About Convertible Bond Financing For Companies In China

Convertible bonds(CB), are corporate bonds, which are issued by a corporation under conditions prescribed by law and can be converted into common shares according to preset conditions in a preset period. It is a hybrid security that retains the characteristics of common corporate bonds, and offers the option of conversion into underlying stock. It endows the right to investors to convert CB into common shares at a certain price in a certain period. In the1970’s, owing to the development of the option pricing theory, it has become one of the most popular financing and investment instruments in China. After more than10years of development, our CB market has achieved considerable progress, in scale and in quantity. At present, CB has become one of the leading methods for corporate refinancing.This article stands the view of enterprises’financing. It analyzes the convertible bonds as one of the enterprises’financing channels, have made some positive research in combination with the practice of Shanghai Motor Company’s convertible bonds issuing, and discuss the problem that how could an enterprise to grasp the means of convertible bonds and practice wisely. At the same time, it does some suggestion to the B-S model and basic diathesis in order to play a positive role in development of our CB market.