Sustainable Debt Financing Financial Effect Comparison

Perpetual bond is a kind of bond which has no maturity date, and Perpetual bond issuers doesnot repay principal, but the needs for regular interest payments.Perpetual bond can be recognized asthe issuance of enterprise’s equity capital, also can be recognized as the issuance of corporate debtcapital, which depends on the issue of sustainable debt enterprise control perpetual bond over theextent to which the right of redemption.Perpetual bond originated in eighteenth Century the Britishgovernment, has more than200years before publication history, but are generally issued by thegovernment, so the development is very slow,and Perpetual bond in recent ten years in theinternational market began the massive release.Perpetual bond as a bond market innovativeproducts,there has been a mature development in foreign capital market, but also widelyused.Perpetual bond in China starts late, in recent years China’s Hong Kong region have sustainabledebt issue part of the listing Corporation, but because the bond market demand is not high, thecirculation is far less common bond issuance, so little.The first perpetual bond in China is issued bythe Wuhan Metro Group Co. Ltd. in2013.Then from2013to2014in the mainland market morethan twenty sustainable debt, including renewable bonds and sustainable in the ticket.In recent years,in the rapid development of China’s bond market opportunities, to issue perpetual bond financingcan provide debt financing instruments of foreign advanced to the issuer, and provide investors withnew investment products to meet the diversified investment demand.The timely introduction ofperpetual bond products are also very rich products of China’s bond market sequence favorable.In this paper, analysis on perpetual bond financing and equity financing and common financialeffect of debt financing. First, apply to the basic situation of perpetual bond and enterprises made acomprehensive analysis; Then, introduce perpetual bond financing compared with common bondsand common equity financing advantage; Second, introduce perpetual bond financing theory andbased on the theory of financing analysis of the financial effect, provides the theory support for caseanalysis and empirical research, comparative analysis on perpetual bond financing and equityfinancing and debt financing influence on enterprises, as well as the issue of perpetual bondcompared with no issue of enterprises profit effect for empirical analysis. Study found thatperpetual bond financing than the equity financing and debt financing in capital costs, risks, andbenefits have advantage.