Research On The Investment Value Of China's Perpetual Bonds

In recent years,China's financial market has gradually improved,various types of financial products have emerged in an endless stream,and the types of direct financing products have been continuously enriched,especially in the period when stock market is not booming and long-term and short-term financing instruments such as private placement debt and hybrid capital bonds have effectively helped enterprises tide over the difficulties.The advantages of controllable issuance period,adjustable terms of distribution and the ability of hybrid capital to reduce financial leverage have attracted many companies to test the water.Since 2018,there has been a real “sustainability” phenomenon in perpetual bonds.Investors have also raised some questions about which companies prefer to issue perpetual bonds,how to choose for sustainable bonds,and where the difference between perpetual bond pricing and ordinary bonds is.At present,domestic scholars' research on perpetual bonds still stays under the interpretation of basic characteristics and basic terms.There is little research on pricing.This paper is devoted to studying the basic characteristics of preference for issuing perpetual bonds and trying to analyze the pricing of perpetual bonds.The first and second chapters of this paper mainly introduce the basic knowledge of perpetual bonds,introduce the research background,innovations and inadequacies,and review the literature review related to the study of perpetual debt pricing.The third chapter of this paper studies the current status of perpetual bonds.The fourth chapter studies the fundamental characteristics of perpetual bond issuers,from profitability level,solvency level,operational capability level,development capability level,listed company shareholding structure,company size,unused credit line,and company's listing period.Through independent sample T test,independent sample Mann-Whitney U test,factor analysis and binary logistic regression,The weaker the solvency,the more inclined it is to issue perpetual bonds.The fifth chapter studies the perpetual debt pricing problem.This chapter changes the interest rate from the benchmark interest rate and credit risk.The difference angle analysis uses the B-S option pricing formula to calculate the theoretical price.The theoretical spread equals credit risk spread pricing plus interest rate risk spread pricing,and plus Liquidity premium,and then compare the theoretical spread to the initial spread.The smaller the theoretical price is higher than the initial spread,we believe that the bond market value is overvalued,that is,the bond investment value is low.Finally,the redemption is taken into consideration.If the interest rate after the jump is closer to the coupon rate,the issuer has no incentive to exercise the redemption right.The sixth chapter is the conclusions and recommendations.It summarizes the conclusions of this paper and makes recommendations for the existing risks.