A Case Study Of 16 Feitou Exchangeable Bonds Default

Exchangeable bonds refer to bonds that are issued by shareholders of listed companies,and the holder has the right to exchange the underlying stocks during the exchange period according to the agreed conditions.Unlike convertible bonds,the exchange of convertible bonds does not cause changes in equity.Exchangeable bonds have been developing rapidly in China in the past three years.Their financing and reducing functions are favored by enterprises,and their application scenarios are constantly enriched.Howerver,the potential default risk under the prosperity can not be underestimated.With the downturn of economy and the breaking of rigid payment,the issue of exchangeable bond default exposed,triggering a series of chain reactions.Since most of the counterparties of private exchangeable bonds are asset management products,the ultimate victims of bond default is the investors of managed products.This paper makes a case study of the first substantive defaulted exchangeable bond in China,and analyses the cause of default.Chapter ? gives a brief introduction to the basic concepts of exchangeable bonds and the present situation of their issuance.This chapter summarizes the risks of exchangeable bonds and the risks of assets management products which invest exchangeable bonds.Chapter ? introduces the basic situation of the issuer in this case and the specific items of bonds.In this case,the issuer of exchangeable bonds is not the same subject as the underlying stock company.Therefore,Chapter III analyses the reasons for the default from the above two perspectives,and the author finds that the direct cause of the default is the continuous decline of the underlying stock market,which leads to the extremely low acceptance of the exchange.The fundamental reason is that the issuer of exchangeable bonds has a high stock pledge rate and weak ability to pay.There are many other factors that affect the interests of investors.The conclusion of this paper is that investors are confronted with three levels of risks when investing in exchangeable bonds through investment management products.One is the issuer of exchangeable bonds,the other is the underlying stock of exchangeable bonds,and the third is the related asset management products.Firstly,investors should distinguish between the issuer of exchangeable bonds and the underlying stock company,investigating the issuer of exchangeable bonds and judging whether it has the ability to pay.Secondly,they should focus on the underlying stock,pay attention to the trend of the underlying stock price,and realize the maximization of returns and risk aversion.Finally,investors should supervise the issuer of the asset management products and pay attention to the operation of the products.In addition to the improvement of investors' risk awareness and hedging ability,the relevant regulatory authorities also need to establish the relevant monitor system to help the bond market develop well.Compared with other literatures,the innovation of this paper is to study the default of exchangeable bonds,and to penetrate the interest victims of the default of exchangeable bonds into the purchasers of asset management products.Many previous studies have focused on corporate bonds and convertible bonds,and few studies have focused on the default risk of exchangeable bonds.The case studied in this paper is the first default bond in China's exchangeable bond market.The purpose is to raise the awareness of risk prevention of default of exchangeable bonds and protecting the interests of investors.Due to the disposal after default has not been carried out,this paper still has limitations.