Research On The Motives And Consequences Of China Jilin Forest Industry Group Abandoning The Redemption Of Perpetual Bonds

With the continuous development of the capital market,many financial instruments such as perpetual bonds have gradually entered the attention of investors.When perpetual bonds first entered the Chinese market in the early days,most companies included them in equity instruments to optimize their capital structure.The issuance terms of perpetual bonds generally stipulate their redemption,and if they are not redeemed within a certain period of time,the interest rate will jump,resulting in higher financing costs,so most enterprises will choose to redeem perpetual bonds at maturity.However,as soon as the announcement of China Jilin Forest Industry Group abandoning the redemption of "15 Sengongji MTN001" was released,it became the first perpetual bond in the bond market to abandon redemption and cause interest rates to jump,breaking the expectation of "non-perpetual" perpetual bonds,and since then more and more enterprises have chosen to abandon the redemption of perpetual bonds and reset interest rates.Therefore,it is necessary to pay attention to the motives and consequences of China Jilin Forest Industry Group abandoning the redemption of perpetual bonds,and put forward certain enlightenment based on case analysis.In this paper,after combing through the literature related to the nature determination,financing motivation,issuance terms,redemption and waiver of redemption of perpetual bonds in domestic and foreign research,this paper briefly extracts the research ideas.Then,the optimal financing theory,agency cost theory and trade-off theory are deeply explored and applied,and the motivation of China Jilin Forest Industry Group to abandon the redemption of perpetual bonds is analyzed by case analysis method,and the consequences of abandonment of redemption are explored from multiple angles.Finally,the corresponding conclusions are drawn based on the case analysis of China Jilin Forest Industry Group’s abandonment of the redemption of perpetual bonds,which has certain reference and guiding significance for other companies on how to control the number of issuances,grasp the timing of perpetual bond redemption,and do a good job in internal control and risk early warning.Through case analysis and research,it can be found that the main reason why China Jilin Forest Industry Group gave up the redemption of perpetual bonds was that there were many financial problems caused by the deterioration of its operating environment;At the same time,due to the large increase in interest due to the abandonment of redemption of perpetual bonds,the credit of the Group was damaged due to the moratorium,and the phenomenon of excessive leverage occurred,making internal and external risk management more difficult.Abandoning the redemption of perpetual bonds cannot fundamentally solve the problem for China Jilin Forest Industry Group,which has a high debt ratio,declining credit rating for many years,and long-term difficulties in operating conditions,and the resulting risks may even become "the last straw that kills the camel";Various negative impacts have severely damaged the external image of China Jilin Forest Industry Group,and its competitiveness has also dropped significantly,which has greatly promoted the process of bankruptcy and restructuring of China Jilin Forest Industry Group.Therefore,perpetual bond issuers,including China Jilin Forest Industry Group,should pay close attention to national policies and strengthen sustainable profitability;Actively explore new financing channels and seize the opportunity of issuance redemption;Strictly control the number of perpetual bonds issued;Establish a risk monitoring system;Promote issuers,underwriters(custodians),government departments,rating agencies and regulatory authorities to jointly strengthen the supervision of perpetual bonds,and provide reference and reference for perpetual bond issuers.