Research on Convertible Bond Issuance Program

Abstract

As of 2023, it has been 32 years since convertible bonds were introduced into China. In 1992, Baoan convertible bonds, as China's first convertible bonds, were issued with an issue size of RMB 500 million, thus opening the door to China's convertible bond market. However, for a long time, due to the imperfection of relevant laws and regulations, the growth rate of the convertible bond market has been very slow, and listed companies prefer equity financing, which makes it difficult for convertible bonds to be implemented on a large scale. However, since 2015, the Securities and Futures Commission (SFC) has issued a series of laws and regulations, including the Implementing Rules for the Non-public Offering of Shares by Listed Companies (2017) and the Notice on Matters Relating to the Reporting of Procedural Transactions of Convertible Bonds (2021), which shows that the SFC intends to promote the standardized development of convertible bonds. As a result, the number and size of convertible bonds have grown rapidly, and convertible bonds have become increasingly popular among low-risk investors. In the increasingly hot situation of the convertible bond market, this paper chooses Jiangnan Water Company as a typical case representative, through the analysis of its convertible bond issuance program, the company's early resale behavior of the motivation and impact to find the problems in the corporate issuance of convertible bonds, and for the future want to issue the convertible bonds of the company to provide the applicable recommendations, the following is the research of this paper to improve some of the measures: choosing the right time of sale; the establishment of convertible bonds early warning system, strengthen internal control; according to the financing project to select the appropriate financing methods, and so on.