Research On Motivation And Effect Of China Communications Construction Company Limited Issing Perpetual Bonds

In recent years,China has been innovating financial products to improve the financing structure.As a new type of hybrid financing tool,perpetual bond has attracted the attention of many enterprises.Compared with other financial instruments,perpetual bonds give issuers autonomy in terms of maturity redemption and delayed payment of interest,so perpetual bonds can be included in equity instruments in accounting treatment.In practice,mo re and more enterprises are willing to use perpetual bonds to broaden financing channels,optimize financing structure and reduce financial risks.Although perpetual bonds are recognized as equity instruments in accounting treatment,most issuers choose to redeem them on the first maturity date.Obviously,the perpetual debt has not realized the real sense of sustainability,and has not completely got rid of the characteristics of debt.In order to explore whether perpetual bonds can really help issuers cre ate value,this paper takes CCCC as an example to study the motivation and effect of issuing perpetual bonds.First of all,through the study of the financing process of perpetual bonds,this paper found that the issuance of perpetual bonds by CCCC had obvious periodicity.After the first issue of perpetual bonds in 2014,CCCC continued to issue perpetual bonds until 2018.Therefore,this paper studi ed the motivation and effect of CCCC issuing perpetual bonds by stages.Specifically,the first issue of perpetual bonds issued in 2014 was divided into separate issue stage,and the seven issues of perpetual bonds issued in 2018 and 2019 were divided into centralized issue stage.Secondly,according to the internal and external financing environment faced by CCCC,this paper analyzed in detail the financing motivation of perpetual bonds in the stage of separate issuance and centralized issuance.This paper held that the financing motivation of the perpetual bond in the stage of separate issuance of CCCC mainly included the following three points: First,the perpetual bond was allowed to be included in other equity instruments.Second,the market access threshold of the perpetual bond was low.Third,the replacement of bank loans.The financing motivation of CCCC’s perpetual bonds in the stage of centralized issuance mainly included the following four points:First,implemented the regulations of reducing leverage of SASAC.Second,optimized the financing structure.Third,supplemented working capital.Fourth,maintained the stability of equity structure.Then,this paper used comparative analysis method and event study method to study the comparative financing effect,financial performance effect,market reaction effect and non-financial effect of CCCC issuing perpetual bonds at different stages.Through specific research,this paper drew the following four conclusions: First,in the case of high debt ratio,perpetual debt was more suitable for CCCC.Second,although the perpetual bond improved the short-term solvency and cash flows of CCCC,it didn’t contribute to the improvement of long-term solvency,profitability and financing structure.Third,the market reaction in the single issue stage had a positive effect,while the market reaction in the centralized issue stage had negative effects.Fourth,sustainable bond financing provided a source of funds for CCCC’s innovation driven transformation and upgrading and steady development of overseas markets.Finally,through the research on the motivation and effect of CCCC’s issuance of perpetual bonds,we could get the following three enlightenments:First,aim at the timing of issuance and redemption.Second,increase the flexibility of issuance terms.Third,improve the cash production capacity of business activities.