Research On The Motivation And Consequence Of Perpetual Bond Issuance Of Xiamen International Trade

A perpetual bond is a security that has no fixed maturity date,or an issuer with an agreed maturity date has an option to extend the maturity.During the life of the bond,the holder of the perpetual bond can receive regular interest,but there is no specific time to recover the principal.When the perpetual debt is included in the equity capital treatment,which has many advantages.However,the renewal of perpetual bonds will increase the financing cost with the jump of interest rate,forcing the issuing enterprises to redeem as soon as possible.The actual duration does not mean the real sustainability.In 2013,perpetual debt appeared in China's financial market for the first time.In the following years,the number of issuing enterprises increased,involving a variety of industries.The participation of commercial Banks in 2019 will further expand the subject of perpetual bond issuance.In the same year,the ministry of finance issued new regulations detailing the accounting treatment of perpetual debt,further stipulated the conditions to be met for the perpetual debt included in the equity,and stipulated the tax issues of perpetual debt.So it is necessary to continue to study perpetual debt.At present,the research on perpetual debt mainly focuses on the real estate industry,but there is no research on the trade industry.Xiamen international trade is in a leading position in the industry.Since 2016,it has issued perpetual bonds for many times every year.The research on xiamen international trade can provide reference for enterprises that have issued or will issue perpetual debt financing in the future.At present,the research literature of perpetual debt mainly focuses on the unilateral study of motivation,financial benefit and risk.Case analysis,literature research and comparative analysis are used to comprehensively study the economic consequences of sustainable bond financing and reveal the advantages and disadvantages of sustainable bond financing.At first,this paper introduces the background and importance of the research in detail,and summarizes the research results of scholars on the property classification,issuance motivation,issuance impact and financing risk of perpetual debt.Secondly,it defines the meanings of the two related concepts of perpetual debt and economic consequences in this paper,sorts out the theoretical basis involved in the research of this paper,briefly analyzes the financing effect of perpetual debt based on theory,and describes the issuance of China's perpetual debt.Thirdly,the article analyzes the issuing terms and the issuing motivation of xiamen international trade perpetual bond.Then,the economic consequences of perpetual debt financing are analyzed.By means of comparative analysis,this paper studies the costs of general debt,equity financing and perpetual debt in three different financing methods.This paper finds that perpetual debt financing can reduce financing costs.In terms of financial benefits,the issuance of perpetual bonds can optimize the cost of capital and improve the operating ability and profitability of enterprises.However,in terms of market reaction,the research results of event analysis show that perpetual bond financing has a negative effect and investors hold a negative attitude towards perpetual bond financing.At the same time,this paper finds that xiamen international trade may face financial risks,credit risks and policy uncertainty risks when issuing perpetual bonds.Finally,based on the analysis process and conclusion,some Suggestions are put forward for the issuing enterprises,investors and regulatory authorities of perpetual bonds.