Research On The Risk Of Exchangeable Bonds

Since the successful issuance of the first exchangeable bonds in 2013,more and more companies have chosen to use this less costly method of financing and stocks reduction.The exchangeable bond market in our country has flourished.This also means that the identification and control of risks such as credit risk and market risk of exchangeable bonds will be an important issue that must be faced in the exchangeable bond market.However,due to the late start of China's bond market and the lack of historical data on credit rating,the current methods for identifying and measuring the risks of exchangeable bonds are not perfect.Qualitative analysis,credit scoring model,and structural credit model are currently commonly used foreign bond risk measurement methods.They can measure the risks of exchangeable bonds from a qualitative and quantitative perspective.Although,due to the lack of historical credit rating data of exchangeable bond issuers,these methods are not fully applicable to measuring the risk of domestic exchangeable bonds,but the factors affecting the risk of exchangeable bonds can be analyzed from these models.These risk factors start to identify and assess the risks of exchangeable bonds.For exchangeable bonds,their risks are not only affected by the setting of their own terms,but also affected by many factors such as the macroeconomic environment and the development of the industry.Therefore,starting from the risk factors of these exchangeable bonds,it is of great significance to study the risk of exchangeable bonds.On the basis of the general study of exchangeable bonds,this paper uses “14 Baosteel EB” as an example to study the reasons for the guaranty of the maturity of the bond under the negative factors such as economic downturn and capacity elimination in the steel industry.This study believes that in an unfavorable economic environment,convertible bond issuers should improve their ability to improve their ability to prevent defaults on bonds by improving their level of operations,making rational use of their periodicity,making reasonable guarantees,optimizing their debt structure,attaching importance to the provision of terms,and improving information disclosure.