Motivation And Risk Analysis Of Perpetual Bond

The real estate industry, a pillar industry of the national economy, plays a veryimportant role in the social life. But in recent years,there are lots of factors thatworsen the industry’s financing environment which means essential to the real estateindustry’s development, such as shrinking size of bank credit, low level of the stockmarket, limit of the real estate trust financing, as well as high price of thedebt-financing. The banking system,which is the most important funding sources ofthe real estate company, lack of liquidity and credit funds, under the government’smacro-control and interest rate liberalization. In this case, the perpetual bond, anemerging financing model which can helps not only broaden the financing channels,increase corporate cash flow and reduce asset-liability ratio in the mean time for thereal estate business, but also allow banks to make profits without occupying creditscale, came into being.After Evergrande Group‘s application of perpetual bond, other major real estatecompanies follow,which makes perpetual bond financing hot. But up till the presentmoment, the research on this innovative financing model was still not enough, sothis paper strives to present a comprehensive, in-depth perspective of this financingmodel and also explore the motivation and the risks behind.Through this,it can makea contribution to the research of the real estate company ’s innovative financing modeland Commercial bank‘s regulatory arbitrage, and provide a reference for the financialauthorities to make regulatory decisions.