Big Mac opens new era of convertible bond expansion

Source: Internet
Author: User
Keywords Convertible bonds Big Mac
May 24, the Bank of China's 40 billion-yuan convertible bonds issued by the CSRC issued by the Audit Committee approved. The approval of the largest convertible bond in history means that the bond market is entering a period of rapid expansion.  Analysts said that with the reversal of supply and demand, the risk of falling valuations faced by the short-term bond market cannot be overlooked. The era of rapid expansion of convertible bonds news from the China Securities Regulatory Commission website shows that bank of China's 40 billion-yuan convertible bond issue application was approved by the SFC's issuing commission on May 24. Prior to that, the double-liang debt on May 4 restarted the issuance of convertible bonds suspended since last November, but in terms of its size of 720 million yuan, the issue of dual-good transfer debt to the market for the expansion of the symbolic significance of the real significance.  The approval of BOC's transfer of debts really means the arrival of the era of rapid expansion of the bond market. From the scale, to the current market for debt transfer, BOC transfer 40 billion yuan of the proposed circulation is undoubtedly called "Big Mac." According to wind information statistics, as of May 24, 9 listed convertible bonds stock balance of only 9.915 billion yuan, still less than One-fourth of the bank transfer debt. In addition to the bank, ICBC, Sinopec's high transfer of debt issued by the general Meeting of shareholders approved, including ICBC to issue 25 billion yuan, Sinopec proposed to issue 23 billion yuan.  In addition, another 20 listed companies of the issuance of convertible bonds have been approved by the board of directors or shareholders, with the above three total distribution of up to 114.9 billion yuan. From the expansion process, some analysts pointed out that, given its central-state background, the market is expected to issue faster bond issuance than expected. In the case of bank transfer, from March 19, the company's general meeting approved the issue of the bill, to May 24 approved by the SFC, only two months and 05 days. According to wind statistics, of the proposed debt-issuing companies, 10 companies in the General Assembly approval date earlier than the bank, but only in Sichuan Mei Fung's issue application has been passed.  As a result, BOC's current issuance of convertible bonds is progressing rapidly. From a bond issuer's point of view, the market is facing the pressure of expansion far more than this. The first venture analyst pointed out that, first of all, under the current weakness of the equity market, the transfer of debt issued to the market impact relatively small, easier to obtain regulatory approval.  Secondly, the interest rate of transfer debt is far lower than the credit rating, the distribution cost advantage is significant, and it has strong attraction to issuers.  Old coupons Face the pressure of valuation drop considering the rapid expansion of market scale caused by the transfer of bonds, the relationship between supply and demand will have a certainty reversal, and the risk of valuation decline faced by the short-term bond market should not be neglected.  CICC points out that although many fund companies have planned to issue innovative bond funds this year, the overall size of the bond fund is expected to rise, but compared to the huge expansion pressure in the market, bond fund size expansion in the scale, the two-tier market will be difficult to reproduce the imbalance between supply and demand of the value of a sharp rise. Wanguo said that the current valuation level of the market is still relatively high, in view of the current transfer of debt market liquidity is poor, the future with the market for highRapid expansion, the valuation of the debt-bond bubble will gradually fall or even quickly dashed.  It is suggested to reduce the high valuation transfer debt gradually during the market rise. In contrast to the pressure on the valuation of the old coupons, from the first-tier market or the beginning of the listing of new stocks to overweight chips or will become the mainstream choice of investors. The first venture said that on the one hand, the large market transfer debt scale, the success rate significantly increased to compensate for the negative impact of the decline in the premium rate; On the other hand, the risk of low price chips in the primary markets is very low, and the holding to the stock can get a higher holding period return. After market transfer, the premium rate is low and the stock is very strong, which can be used as the substitute for the investment of stock, and the margin of safety of the fixed option is obtained. Therefore, it is recommended to actively participate in the market for the first-tier markets to purchase.
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