Study On The Motivation And Economic Effect Of Perpetual Bond Financing Of Bank Of China

Perpetual bonds,or bonds that can last forever unless certain conditions are met,are hybrid securities and are financing instruments that have the properties of both debt and equity.We adopted a prudent monetary policy to meet the requirements of counter-cyclical regulation.The momentum of rapid growth in the macro leverage ratio was initially contained,financial risk prevention and control made steady and decisive progress,and the quality and efficiency of the financial sector in serving the real economy gradually improved.Basel ? after launch,foreign Banks have a lot of use have sustainable characteristics of tier 1 capital bond tools supplementary capital.In2013,China issued perpetual bonds for the first non-financial enterprise.Before 2019,there was no precedent for domestic Banks to issue perpetual bonds.On January25,2019,Bank of China took the lead in issuing write-down perpetual bonds,causing hot debate.The existing research on commercial Banks issuing perpetual bonds mainly focuses on the experience of overseas Banks.Sustainable debt in China capital market,caused the extensive concern of domestic academia,so far the research scope is more comprehensive,more using sustainable debt financing for infrastructure engineering company,and part of the real estate enterprises to adopt sustainable debt financing,research related to sustainable debt issuance of motivation,economic consequences,risk,bond pricing,accounting treatment and overseas experience,etc.This case study first combines the macro and micro hot spot policies and phenomena,and then compares the foreign mature capital markets to put forward the research problems of this paper,focusing on the issue of perpetual bonds,and selects a typical case--Bank of China.Firstly,it introduces the basic situation of bank of China in the industry,risk management and the terms and contents of bank of China's perpetual bonds.Secondly,the paper analyzes the motivation for bank of China to issue perpetual bonds,and then compares the advantages of perpetual bonds with other financing methods,such as preferred shares,from the aspects of issuer scope,issuing process efficiency,accounting and tax treatment.Thirdly,it analyzes the economic effect of issuing perpetual bonds from the aspects of capital cost analysis,improving profitability and market response.Finally,it provides reference for issues related to issuing perpetual bonds in the future.Through the case analysis,analyzes the reason of sustainable bond issuance andother financing advantages,in the upcoming sustainable debt enterprises can help the commercial Banks,to have a sustainable debt financing of commercial bank risk which the enterprise can help them resolve,reasonable planning the financing behavior has the practical significance in the future.