Case Study Of WX Company Issuing Exchangeable Bond Financing

In October 2008,the Securities Regulatory Commission promulgated the "trial provisions on the issuance of exchangeable company bonds by shareholders of listed companies"(CSRC Proclamation[2008]41),which officially launched the convertible bonds,which is an innovative product based on convertible bonds.The biggest characteristic is to be able to swim in the stock debt,"debt" to avoid the risk of falling stocks,"shares" can enjoy the gains from the stock rise.In early September 2017,the Shanghai and Shenzhen stock exchanges combined China Securities Clearing Company,issued a draft on the stock pledge repurchase transactions,the specific content of the stock pledge of repurchase and registration of detailed provisions,involving financing threshold,capital use,pledge concentration and the pledge rate and other aspects,known as " The most strict new rules of stock pledge repurchase in history,is called "the most strict",it is because the regulation clearly points out that the market must control the stock pledge rate within 60%,a securities company to accept a A-shares of the number of shares of the pledge control within 30%of this only a-share equity market,a share of the overall pledge ratio control within 50%.In this policy context.for enterprises,the exchange of debt compared to stock pledge financing,financing advantages more obvious.One is compared to the stock pledge financing convertible debt of the pledge rate is higher;second,the SFC issued a"reduction of 10" new rules,greatly restricting the stock pledge financing.And the debt payable is an innovative breed that is strongly supported by the exchange and is not subject to the new rules.Since 2015,the Shanghai Stock Exchange and Shenzhen Stock Exchange total issuance of 131 debt payable,the issue size of 135 billion.In the current policy environment,the debt can meet the important development opportunities.Through the analysis of the case of the issue of exchangeable bonds by WX Company,this paper obtains some enlightenments from the enterprise financing.One,exchangeable bonds can provide a new model for business management market value and debt financing.Second,exchangeable bonds can add a new tool for the financing of enterprises,which is more liquid than before.Third,the exchange of bonds laid the future market on the stock price trend,the majority of holders have a common characteristics,that is,more optimistic about the company's development prospects,and stock prices have greater confidence,which to a certain extent to help stabilize the market and help investors rational choice of investment objects.Iv.The increase in the type of fixed income investment products that investors can choose will help to consolidate the intrinsic link between the stock and bond markets.The author's research idea is to put forward the problem first,then analyze the problem and finally solve the problem.In the first part of the article,the author makes an in-depth interpretation of the definition of exchangeable bonds,and with WX company as a typical,the company's operating conditions,assets and liabilities and the terms of the exchange of debt are all described,Luo listed the problems to be solved,that is to say,What is the basis and prerequisite for WX to carry out the exchangeable bond business,and the benefits and drawbacks of the issuance of the exchangeable bond business to the company.The next part of the article is to compare the situation of WX company before and after the issue of exchangeable bonds,to analyze the changes in the composition of capital structure,the availability of profits and cash flows,and how these changes have affected the business.The financing cost of issuing exchangeable bonds also plays a vital role in this issue.At the end of the article,the paper describes the implications of the successful issuance of this convertible bond to issuers and investors.At the same time,regulators have found some deficiencies in the regulation of exchangeable debt through the issuance of this exchange debt,which lays a good foundation for future domestic exchange bond issuance.