Financing Risk Analysis Of Convertible Bond

Convertible corporate bonds are based on corporate bonds and are given certain conversion rights.Bondholders can convert convertible bonds into ordinary shares of the issuer at a predetermined price within a specified period of time.In the capital market,It is a relatively mature hybrid financial derivative instrument.In 1992,the "Baoan Convertible Bonds" issued by Shenzhen Baoan Group marked the official entry of convertible bonds into China.This is the first convertible bond issued by A-share listed companies in China's history,with a total amount of 500 million yuan.The development of convertible bonds in China has played a driving role,but due to the lack of precedent,technical defects at the time of issuance,and incomplete policies,etc.,the conversion failed,and then the development of convertible bonds in the Chinese market was slow until After 2017,the number of issuances has skyrocketed,and the scale has gradually expanded.The development of convertible bonds in the Chinese market has a clear advantage.Because convertible bond financing is in line with the development trend of the securities market,it has the dual characteristics of equity and debt.Compared with equity financing,it can alleviate the impact of equity dilution on enterprises.Compared with debt financing,its financing cost is extremely low and can bring taxes.The shield effect is conducive to adjusting the capital structure.It is precisely because of these advantages that convertible bonds have gradually become the financing method favored by most corporate managers.However,due to the short launch time and imperfect macroeconomic policies,which are greatly affected by the economic environment,this financing method is not mature in the country.There are still many problems.Many issuers only see the issue of convertible bonds.Advantage,blindly follow the trend,ignore the possible risks of financing,leading to the failure of convertible bond issuance,or although the issuance is successful,due to the company's own risks and the specific risks brought by the issuance of convertible bonds are not effectively controlled,resulting in failure to reach the holding the expected stock price of some people caused the conversion failure,which caused the enterprise to face huge capital pressure and payment risk,and even made the company bankrupt.This also shows that the financing risk of convertible bonds needs to be taken seriously,and its research is necessary.This article combines theory with cases and relies on specific cases to quantify the risks that exist in financing convertible bonds,making it easier to find and control risks.First,the literature on convertible bonds and financing risks was collected and summarized,and a case study—Yanjing Convertible Bonds,was used to analyze the risks in the financing process and try to find out the reasons for the lower risks.The risk of convertible bonds is divided into four aspects: operating risk,financial risk,issuance risk,and clause design risk.Find the specific risks one by one.After obtaining the weight of each risk through the analytic hierarchy process,use fuzzy evaluation.The method assesses the overall risk and concludesthat the overall risk of Yanjing Convertible Bonds is at a relatively low level.Then,combining Yanjing Convertible Bonds to analyze its control measures,it is found that the financial basis of Yanjing Convertible Bonds before issuance is good,and the solvency and profitability are very high.strong,the timing of the issue is chosen to coincide with a period of time when the stock market has turned bears,and the large shareholders have a high subscription rate and actively convert into shares during the continuous period.When the stock price continues to fall,Yanjing Beer actively adjusts the share price.The measures made Yanjing convertible bonds successfully issued and reached a conversion rate of 93.44%.Finally,it is concluded that it is not only the company's own operating and financial status that should be paid attention to,but also the risks that may exist,such as the timing,object,and design of the issuance of convertible bonds.Provide reference for other companies that want to raise funds through convertible bonds.