Study Of China Minsheng Bank’s Issued Convertible Bonds Program

Convertible bond is a popular financing method, which has the characteristics of equity and debt, and the low issuance threshold, long term, low cost, small impact on the company share price. However, compared with the scale and perfection of convertible bonds market in Europe and the United States, China’s market development is late. CMBC, as one of the largest issued scale of convertible bonds, have the more accurate characteristics and advantages for an ample to analyze its convertible bonds.Firstly, after a comprehensive analysis about the motivation of CMBC convertible bonds, we analyze the external competitive environment and internal financing needs about CMBC, then can find CMBC being in expansion and having strong financing demand to develop future business and deal with the fierce competition; By profitability analysis, CMBC have a good and stable profitability, which will have a certain appeal to investors in the capital markets.After analyzing three exterior methods of raising funds, the results show the convertible bond can lead to higher shareholder returns.Then, by detailed interpretation of CMBC issued convertible bonds program, found that the convertible bonds created a success in terms of cost savings, achieving financial goal; however, there are some flaws in designs, such as the high initial conversion price, the wrong time to release, relatively high option value of theoretical value, increasing the risk of investors, and provisions designed to protect the interests of investors being not enough.The paper put forward some suggestions of similar companies for the sample of CMBC, firstly, keep the benefits between the new investor and the original, design the terms of issue reasonable, secondly.enhance the awareness of risk and decide to issue at the right time; lastly, the regulatory authorities should take action to strengthen supervision of the capital market to create a good environment.Based on long-term development considerations of CMBC, the paper suggests that CMBC should reduce the price of the conversion, select the appropriate time to release good news to enhance Minsheng Bank shares, and choose the Redemption right to redeem part of Minsheng Convertible Bonds to reduce the financing scale.