Research On The Motivation And Financial Effect Of Issuing And Renewing Perpetual Bonds

The capital structure of a healthy enterprise is usually very reasonable.Therefore,when the owner invests a certain amount of capital,how to reasonably raise sufficient working capital through a variety of financing methods and control the financial risk to a reasonable range has become an important issue faced by enterprises.Sustainable debt financing can not only effectively obtain long-term funds,but also reduce the risk of equity dilution.If the conditions are met,the perpetual bonds can be included in the equity items,and because the single issue amount is usually large,the impact on the adjustment of the debt ratio will be more obvious.Perpetual bonds have the advantages of low capital cost and relatively low issuance threshold,so they have attracted much attention since they were introduced into China.After nearly a decade of development,the stock of enterprise sustainable bonds in China’s bond market is nearly 2000,and the stock scale has exceeded 2 trillion.Whether the issuer chooses to renew the maturity of the perpetual bond needs to consider its own financial situation,such as whether the working capital is sufficient,the pressure on the maturity of future short-term debt,the future financing cost and availability,as well as the macro environment.Therefore,based on the issuer of perpetual bonds,this paper studies the motivation and financial effect of the issuance and renewal of perpetual bonds from the perspective of the issuer.Taking Zhengzhou coal industry(Group)Co.,Ltd as an example,this thesis combs the relevant literature and theoretical basis of sustainable bonds,analyzes the motivation of the issuance and renewal of sustainable bonds of Zhengzhou coal industry(Group)Co.,Ltd,and studies the effect of the issuance and renewal of sustainable bonds with basic financial analysis and EVA analysis.When studying the issuance and renewal of Zhengzhou coal industry(Group)Co.,Ltd ’s perpetual bonds,this paper analyzes the relevant financial data from 2013 to 2021,analyzes the solvency,profitability,operating capacity and cash flow before and after the issuance of Zhengzhou coal industry(Group)Co.,Ltd ’s perpetual bonds,and then analyzes the renewal cost,renewal income and renewal risk.Through the research,the following conclusions are drawn: first,the sustainable debt plays a positive role in enhancing the solvency,improving the working capital situation and alleviating the cash pressure.The issuance of sustainable debt improves the operation and financial situation of Zhengzhou coal industry(Group)Co.,Ltd and optimizes the financing structure.Second,the impact of perpetual bonds is two-sided.On the one hand,it improves the operation and financial situation of Zhengzhou coal industry(Group)Co.,Ltd.On the other hand,the renewal of perpetual bonds will increase the interest expenditure of the enterprise,lower the company’s profits and put pressure on the company’s working capital.Based on the above conclusions,this thesis puts forward some suggestions for issuers and regulators to improve their own strength,ensure repayment ability,grasp the issuance opportunity,reduce financing costs,issue cautiously,prevent risks,decide whether to renew and strengthen the issuance qualification examination,and establish the performance evaluation system of sustainable bond issuing enterprises.This thesis studies and analyzes the motivation and financial effect of the issuance and renewal of perpetual bonds.There is a close relationship between the issuance and renewal of perpetual bonds.Most of the previous papers focused on the issuance of perpetual bonds,and there was less research on renewal.It is hoped that the analysis of this thesis can provide reference for enterprises to issue and renew perpetual bonds.