Research On Financing Performance Of Convertible Bonds Of Zheneng Electric Power Co.,Ltd

As a refinancing method of listed companies recently introduced into China,convertible bonds are favored by many companies and investors because of their dual characteristics of combining creditor's rights and equity.However,the use of convertible bonds for financing is not without advantages and disadvantages.Many companies end up with high debts due to the failure of stock conversion,so it can be seen that convertible bonds are a financing method with both risks and advantages.Therefore,it is necessary to study how to reasonably choose financing methods and avoid financing risks of convertible bonds.As a convertible bond successfully listed in recent years and finally completed the equity conversion,the experience of Zheneng convertible bond may give us some reference and inspiration.Therefore,this paper takes Zheneng convertible bond as a case to study its issuing process,and finally obtains the universal enlightenment.Firstly,this paper expounds the tradeoff theory,the optimal sequence financing theory,agency cost theory and relevant theory and the four methods of performance evaluation of the convertible bond,secondly introduces the convertible bond financing for the enterprises to actualize can Zheneng Electric Power Co.,Ltd and the Zheneng convertible bond issuance process analysis,and then from the market reaction,financial index,economic value added and equity structure four aspects further study of the Zheneng convertible bond financing event brings to the enterprise.This article can draw the following conclusions through the analysis above:(1)the necessity of project investment,sources of funds,capital structure and market response are taken into account in the decision of issuing convertible bond financing by Zheneng Electric Power Co.Ltd.(2)the design of Zheneng's bond terms is share-oriented.(3)the issuance of Zheneng convertible bond has not brought positive performance response to the company.The reasons for the poor financing effect of convertible bonds of Zheneng Electric Power Co.,Ltd are put forward.(1)insufficient understanding of the function of convertible bonds.(2)the setting of convertible bond clauses is deficient(3)the risk is not reasonably estimated.(4)low efficiency of fund raising.For the above reasons,this paper also puts forward four suggestions on using convertible bonds for financing:(1)to enhance the understanding of corrvertible bonds(2)scientific and reasonable design of release terms.(3)improve risk prevention awareness(4)reasonable use of funds raised.The conntribution of this paper is to analyze the financing performance of convertible bonds of a specific case company and comprehensively evaluate the financing performance from four aspects:market response,financial indicators,economic added value and changes of equity structure.Through this research process,this paper expects to make certain exploration and contribution to enrich the theory of convertible bond financing,and also provide reference for future convertible bond financing enterprises.