Case Analysis Of Exchangeable Bond

Exchangeable bonds originated in the last century 70's Europe and the United States market and gained rapid development.Its development in China is relatively lagging behind,until the end of 2014,"14 Baosteel EB" was just successfully listed on the Shanghai Stock Exchange,which was the first domestic public offering of exchangeable bonds.Under the new background,it is favored by the market.By the end of 2016,the number of issued exchangeable bonds was 69,which scale reached 70 billion.But it must be noted that the exchangeable bonds market in China is still in a relatively backward stage,both issuers and investors could not raise its effect fully without a whole comprehension.As one of the earliest exchangeable bonds,"15 Dongji 01" is a significant sample with winwin model.The issuer reduced holding-shares by private placement and the investors earned much by shares converting.On the basis of reading previous research results,we get the following conclusions by analyzing the case from three aspects: first,the issuer combined exchangeable bond with private placement to underweight,made the target company's business has improved,also impact on the stock price is small;Second,we found that "15 Dongji 01" is equity-like,which provides a reasonable basis for investors,and the final yield is relatively high;Third,we used LSM method to price "15 Dongji 01" and found that its price has been underestimated.Finally,this paper put forward some enlightenment from case analysis and some advices.For issuers,exchangeable bonds can cooperate with other financial tools to meet own demands,it is also important to choose an appropriate timing.For investors,only with accurate judgment can choose a good investment target to achieve high yield,also need to pay attention to the potential risks.For regulators,it can make contribution to the development of exchangeable bond by consummating the laws and rules,building a mature market and enhancing information disclosure.