Listed Bank Convertible Bond Financing Problem Study

Convertible bonds are bonds that are both proprietary and debt-worthy.They bear relatively low interest expenses each year before the conversion,and can supplement core tier one capital after the conversion.In February 2017,the China Securities Regulatory Commission issued a refinancing supervision regulation that imposes a time limit on the financing of general refinancing methods but does not require such financing for convertible bonds.In addition,2018 is the last year of the transition period for the supervision of the capital adequacy ratio of the banking industry.Flexible exchange of capital for convertible bonds and gradual dilution of shareholders' equity are relatively gradual,which makes convertible bond financing attractive to listed banks.Based on this,this paper adopts a combination of case study and statistical analysis to study the issue of convertible bonds financing of listed banks.First,the statistical analysis method was used to analyze the financing status of listed banks' convertible bonds,and it was found that convertible bonds in the convertible bond financing of listed banks were generally lack of innovation in product design,the risk of excessive single-issuance scale was high,and the protection provisions for investors were too little.Lack of tracking and disclosure issues during the issuance period.Next,this paper takes the A-share Minsheng Bank as an example to comment on the Minsheng Bank convertible bond financing program.Finally,it analyzes the causes of the problems existing in the status and gives corresponding countermeasures,which has guiding significance for the successful financing of listed banks' convertible bonds.This paper finds that:(1)Listed banks tend to issue private placement and subordinated debts,but the new regulations of the China Securities Regulatory Commission and subordinated debts can only be supplemented by a single secondary capital.Convertible bonds can be used to supplement capital flexibly.Convertible bonds may become the main method for the refinancing of listed banks in China;(2)Convertible bond financing is generally more dominant than debt,and the purpose of financing is to achieve indirect equity financing;(3)The lower the coupon rate of convertible bonds,the more helpful the conversion of shares(4)In addition to redemption clauses that can accelerate the conversion of convertible bonds,downward revision of the conversion price can increase the investment value of convertible bond holders and promote the conversion of shares.However,the downward revision of the conversion price will dilute the equity of the non-holders,so it can automatically correct the conversion price by sending cash dividends and stock dividends.For the problems commonly found in the financing of listed bank convertible bonds,the following reasons are mainly analyzed in this paper: 1)The terms of issuance of convertible bonds are strict,2)The term of convertible bonds is long,and there is uncertainty in the conversion of shares;3)Investment Insufficient protection of interests,4)The regulatory system of the convertible bond market is incomplete.for the above issues,the paper proposes the following four countermeasures: 1)Differentiated design of convertible bond issuance program,2)Careful selection of convertible bond issuance timing,3)Balancing the interests of investors and original shareholders,4)Improvement of convertible bonds Bond financing external environment.