Case Study On Convertible Bond Issuance By Ping An Bank

In recent years,scale of bank asset has expanded a lot and its capital urgently needs replenishment.Then convertible bonds have begun to become the new popular financing tool in banking.Its advantages are loose regulatory policies and low issuance costs,which can effectively adjust the capital structure of the bank and directly supplement Tier 1capital after the successful conversion.Therefore,studying the motivations and financing effects of convertible bonds issued by listed banks can help us explore the application of convertible bonds in this field better,and provide reference suggestions for the refinancing of the banking.The thesis selects Ping An Bank as the research case of the issuance of convertible bonds,and divides the whole case in three parts.One is to interpret the typical terms set during the issuance process,and analyze the characteristics of the convertible bond issuance.Secondly,it analyzes what prompted Ping An Bank to make the decision to issue convertible bonds.Thirdly,conducts further research on the financing structure,capital quality,profitability,stock volatility and the impact on subsequent financing after the issuance.Through the analysis of the issuance background and various indicators during whole issuance process,it found that the timing of Ping An Bank’s issuance of convertible bonds coincides with the difficult stage of the bank’s business transformation.At this stage,profit growth was slow,and non-performing loans was rising.However,after the issuance of convertible bonds,various indicators of Ping An Bank showed a positive trend,the capital structure was optimized,and the asset quality was greatly improved.The stock price of the company changed,from downturn previously to turn up,providing the bank with better follow-up financing environment.Ping An Bank’s convertible bond issuance is a typical successful case.It utilized many kinds of financing tools which is not limit to traditional financial bonds,allotment and additional issuance.And financing tool it chose was suitable for the long-term development of bank based on its solvency and capital structure.In addition,the issuance period was during the period of the bank’s transformation when the stock price is undervalued.Also the convertible bond clauses were designed to adapt to its own conditions which attracted investors by high credit and high coupons.In the end,the stock price of the convertible bonds rose all the way after the issuance,and the conversion was realized in the year of issuance.