Analysis Of J Group’s Perpetual Capital Securities Financing Motives And Financial Performance

Perpetual capital securities is a bond that is uncertain of the maturity date of a bond.The creditor is not able to determine the time when the principal will be paid,but he can earn interest on a regular basis.The debt sustainability both as a "stock" and "debt" of the dual attributes of financial instruments,may be recognized as equity capital may also be recognized as debt capital,mainly depends on the terms of issue of whether the set of "deferred" and "redemption expiration" clause.Sustainable debt for most domestic issuers may be relatively new,but in the international application of the development has been more mature,and widely used.China’s perpetual capital securities starts late,it issue began in 2013,the Wuhan Metro Group Co.Ltd.released the first single renewal of corporate bonds;the development of Limited by Share Ltd released the first electric power in China’s bond market long-term with the right ticket.In the subsequent 2014 to 2016 period,China has continued to emerge in the territory of a permanent orientation tools,such as the renewal of corporate bonds and other sustainable class bond products.The emergence of these "sustainable" financing products has greatly enriched the varieties of China’s bond market.By the end of 2016,a total of 464 issued perpetual capital securities,a total of 767 billion 600 million yuan.J group as local enterprises involved in long-term domestic bond market innovation,has been involved in debt sustainability pilot and submit the relevant suggestions on debt sustainability accounting treatment to the Ministry of Finance,but for various reasons failed to release the first single.In January 2016,J group successfully used the perpetual debt financing for capital operation,has become one of the successful examples of good financial effect.Based on this background,this paper chooses J group as a case study of the sustainable debt financing and financial performance.This paper firstly expounds the research background and research significance,and summarizes the previous debt financing,debt sustainability,financial performance and other research literature.Believe that the current domestic research on debt sustainability is mostly the status description and pure theoretical research,comparative analysis not on sustainable debt financing and other financing.Moreover,in the research of debt financing performance,there is little research on the financial performance of innovative financing products,especially for the use of single innovation financial products.Then,briefly introduces the content and framework of the research ideas,research methods.Secondly,the base of introduction in all aspects of basic concepts,the debt sustainability development situation,main characteristics and accounting standards of China and other relevant provisions,the comparative advantage of perpetual capital securities financing was theoretically analyzed and studied the theoretical basis of perpetual capital securities financing,including the trade-off theory,pecking order theory and asymmetric information theory.Thirdly,this paper introduces the background of the J group’s perpetual debt financing,and analyzes the reasons for the financing of perpetual debt,including supplementary capital,thickening of equity capital,improve the issuance of space,optimize the capital structure,lock long-term funds,reduce mismatch risk,the introduction of the central rate of capital,deepen the integration of industry and finance,etc.Then,it introduces the process of financing,the risk analysis in the process,the design of the issuance clause and the risk prevention measures.Then,a detailed analysis of the perpetual capital securities financing financial effect,through case analysis,this paper argues that the enterprise through perpetual capital securities financing from the perspective of comprehensive analysis of capital structure,capital cost,financial risk and financial effect,financial effect is superior to the ordinary equity financing and ordinary bond financing.In the end,this paper summarizes the experience of the J group in the process of perpetual debt financing and the inspiration.This paper argues that the J group’s success by debt sustainability this innovative financial products to achieve its financial performance,successful experiences mainly include: reinforce the personnel team,training of all kinds of financial talents;actively participate in policy formulation,strengthen communication with regulators;on capital market dynamics,optimal release time window;enhance the awareness of risk control,improve risk control system.At the same time,I hope this paper can bring some reference and suggestions for the future for the issue of debt sustainability of enterprises,including the combination of enterprise financing strategy,rational allocation of bonds;strengthen the financing process management,reduce the risk of failure to issue;strengthen the combination of industrial capital and financial capital,reduce the cost of debt financing.Based on the normative research,study motivation methods of literature research,case analysis,comparative analysis,qualitative analysis and quantitative analysis of theJ group of perpetual capital securities financing and financial performance.Through the quantitative analysis of perpetual capital securities financing and other financing ways of the enterprise’s financial performance,summarizes its successful experience and Enlightenment in the process of financing,for the improvement and innovation of financing varieties with improved enterprise,has carried on the beneficial exploration to improve financial performance level of the enterprise,it has important practical significance.