Research On The Perpetual Bond Of Beijing Capital Development Co.,ltd.

As a pillar industry for the Chinese economy,the real estate industry,which always has the financing problems,plays an important role in social life.From the aspect of capital structure,real estate companies’ excessive use of financial leverage has made their debt ratio too high to bear,hindering their refinancing ability.From the point of external financing situations,with the credit quotas contracted,the real-estate trust constrainted and financing channel restrainted,the struggles in refinancing have become a bottleneck restricting the development of China’s real estate industry.Therefore,the priority remains in how to broaden the financing channels,stabilize the asset liability ratio,optimize the capital structure of the enterprise and increase the cash flow of the enterprise.In this case,perpetual bond came into being.As a mezzanine financing instrument,perpetual bond has the dual attributes of equity financing and debt financing.As a new refinancing tool,the studies of it are still rare in China.In this paper,we choose the real estate company,Beijing Capital Development Co.,ltd.(hereinafter referred to briefly as BCD),that has issued the most amount of perpetual bond as a case to study,focusing on the issuance of its perpetual bond.This paper first introduces the research background,research significance,status quo of China’s real estate industry,refinancing and the refinancing problems in the process of the introduction of perpetual bond.Also,we introduce its history,basic concepts,characteristics and the current issue situation.Then,we take the BCD’s perpetual bonds as examples,studying the issue process and the insurance clause.At the same time,we combine it’s perpetual bonds with the relevant laws and regulations,making analysis of the accounting treatment and tax treatment of perpetual bonds.After that,we take the BCD’s strategies and financial status into consideration,analyzing the motivations of their perpetual bonds.Those motivations include the supplementary funds,reducing financing costs and reducing asset liability ratio and improving credit rating,etc.As the case study goes deeper,we also analyze different kinds of refinancing tools,which contain debt financing,equity financing and perpetual bonds.The analysis of them focus on their costs,benefits and risks.In the meantime,we use the event analysis method to study the market effect of the issue of perpetual bonds.Finally,we analyze the influence of the BCD’s perpetual bonds.Through the case analysis,the pros and cons of perpetual bonds are summaried.And,we put forward some corresponding countermeasures and suggestions,in order to offering good usage to whom it may concerned,exploring the path of the healthy development of perpetual bonds.