Research On The Perpetual Bond Of GD Company

Since the second half of 2013, domestic innovative capital tools have kept emerging, among which the most representative one is renewable bonds, perpetual bonds, and preference share. In December,2013, the two big infrastructure industries in China, subway and electricity, even took the initiative to have successfully issued the two kinds of perpetual bonds, namely, renewable bonds and long-term medium-term notes, fulfilling the zero break-through of perpetual bonds in China. The advent of perpetual bonds has also brought good news to companies facing difficulties in financing. GD Cooperation issued the perpetual bonds which is of most representatives and boast great significance in China. This is also the value of conducting relative research. It is not only because it’s one of the earliest perpetual bonds that have been successfully issued, but also because it is the kind of perpetual bonds that are more similar to those circulating on the international market. Therefore, the successful issuing of these bonds also set up a benchmark in China which is not only reflected on such pragmatic aspects as accounting and taxation, but also draws great attention in the entire capital market.After talking about the background and contents of the research, introducing the concept of perpetual bonds, its historic development, basic concepts, and current situation of issuing in China, the author combined it with the case studies of the issuing of perpetual bonds at GD Corporation to describe comprehensively its necessity, issuing process, clause design, and effects, then further analyzed such issues of accounting, taxation, its finance implication, finance costs, the protection mechanism for the creditor, and risk recognition. As the case studies and analysis went deeper, the author also compared the perpetual medium-term notes by GD Corporation with the perpetual bonds issued domestically at the same time, and the perpetual bonds issued at different times in the mainland with that in Hong Kong. After multiple comparison from different angles, it is the author’s hope to draw beneficial experience, uncover the issues that are in urgent needs of settling in the pragmatic application of domestic perpetual bonds, providing solutions and suggestions accordingly, and pointing out the development trend of future perpetual bonds products in order to provide good thinking and reference for all parties who attempt to use perpetual bonds to finance and invest and for relevant supervisors, exploring a sound development path for perpetual bonds.