It's been a hell of a time. A friend said he'd only ask for it. I hope it will help you.
What's a transferable debt
The short term convertible corporate bond is a 100-dollar debt with interest paid annually, but the bond has the right to convert the company's shares at a certain conversion price within a specified period of time. Therefore, investors holding the negotiable debt may choose either to hold the annual interest income on the maturity of the bond or to convert it into a corporate stock at the right time to hold it。
Convertible = 100-dollar bonds + rights to convert to stocks
Whether from an enterprise or an investor's point of view, debt swaps are well-suited financial instruments that match the financing needs of enterprises in high-growth stages. It is well summed up by some as rising as a share and falling as a debt。
Transferable rules
Convertible face value: $100 per face
Trading threshold: 10 units per hand, or 10 units per minimum
Liquidity: support t+0 and sell on the day of purchase
Increase or fall restrictions: as with bonds, no increase or fall restrictions on the day
Transaction costs: collection of transaction commission (0. 2 per thousand in shanghai; 1 per thousand in shenzhen; less than $1 per thousand,) without stamp duty
Mode of return: 1, interest gain; 2, trade differential; 3, equity arbitrage
There is no charge for the transfer of debt
Characteristics of reversibility
Equity, debt, conversion
1) equity: after the conversion of shares to equities at a transfer price during the conversion period, the investor becomes a shareholder of the company from a creditor to a participant in the business's business decision-making and distribution of dividends. Once the market value of the shares exceeds the value of the carry-over, it is also able to benefit from an increase above the average bond
2) debt: the nature of the bond guarantee, whereby investors may choose to hold the bond due, collect the principal interest and guarantee the security of the principal; (e. G., in the case of the first, 0. 30, 0. 50, 1. 0, 1. 3, 1. 5 and 1. 80 per cent, respectively, of the first, third, fourth, 1. 5 and sixth years, with the interest rate payable once a year and the last year with the principal)
3) conversion: dual options, on the one hand, where investors may choose whether to transfer shares and bear the opportunity cost of lower rates of conversion; and, on the other hand, where the issuer of the conversion has the option of implementing a foreclosure clause, the option of paying a higher rate of interest for the transfer than for the non-foreclosure clause。
Relationship of reversible debt to equity prices
The figure below shows a comparison of the depth 300 index and the intermediate debt-transfer index from 2005 to the present, with a starting point of 0 per cent. As can be seen from the figure, while the rise and decline are largely synchronized, the increase is not as large as equities, but the intermediate debt-transfer rate is clearly lower than the volatility of the depth 300 index, mainly because of the bond nature of the bond, so that there is a minimum bond price (current prices based on each future cash flow) and a security cushion in the event of a significant market decline that does not fall indefinitely with equity prices。
The reversible debt has the dual character of equity debt, and although in the long run the return was lower than the corresponding equity, it was less volatile and more secure, with a much higher performance than credit debt. As can be seen from the figure below, the cow market has seen an excellent increase in its debt transfer, and the bear market has seen a much smaller decline in its debt transfer than its equity counterpart, which is the preferred target for long-term investment. Different reversibles have different levels of debt and equity, with large shareholdings subject to large stock volatility, and large reversibilitys less volatile but more secure。
The figure below is a comparison of the movement of chinese and chinese banks, which can be seen to be essentially synchronized, but within the green box it can be seen that the movement of chinese and chinese banks is relatively stable, and that the continuing sharp decline in chinese banks has resulted in a safer investment and a security cushion。
What do you need to see to analyze the debt that can be transferred
For most investors, the current requisition is for the first day of the market. But if you choose not to sell, what needs to be noticed
"assumption clause."
This is primarily aimed at protecting the interests of listed companies. If the stock price soars, well above the swap price agreed upon in the current period, the clause gives the listed company the right to redeem the debt at the agreed price (as in the case of the lungi debt bulletin), as follows: if, during the period of the carry-over, the collection price of the company's share price a is not less than 130 per cent (including 130 per cent) of the current carry-over price, the company is entitled to redeem all or part of the debtable company's bond at the nominal value plus the interest accrued during the current period。
The foreclosure clause would also, to some extent, facilitate the transfer of shares by investors. Since the transferable debt tends to increase significantly when triggered, the listed companies will have to redeem it at relatively low prices, which will certainly not be agreed. The option would therefore be to sell the shares in the market after they had been transferred, a clause that would facilitate the transfer of shares after the price increases。
“recovery clause”
This provision protects investors and generally limits a period of time. In the last two interest-bearing years of a convertible corporate bond, for example, the holder of a convertible corporate bond is entitled to sell back to the company all or part of the convertible corporate bond at the price of the face value of the bond plus interest accrued during the current period, if the collection price of the company's stock on any of the thirty consecutive trading days is less than 70 per cent of the current transfer price. (other specifics are based on company announcements)
This enhances investor confidence, while also placing a tight spell on listed companies。
“decrease transfer terms”
The aim of the downward adjustment was to avoid early re-selling by investors after the stock price fell, which, for reversible investors, was the company's award of a bonus。
Of course, the transfer price is not randomly reduced, and there are certain constraints. (for example, in the case of long-term debt advances), the board of directors of the company has the right to propose a downward revision of the transfer price and submit it to the general meeting of shareholders of the company for a vote when the company's stock price is less than 85 per cent of the current value of at least 15 consecutive trading days of any 30 trading days. The above-mentioned programme is implemented only by more than two thirds of the voting circles held by the shareholders present。
In addition to these three articles, the “start date of the transfer” and the “start date of the re-sale” would also require serious attention. If you want to hold it on a permanent basis, remember to focus on the company's announcement of reversibility。
Advantage of reversible debt
Intruder, fall back
First, in terms of reversible new gains
Over the past 13 years, the cumulative gains from reversible debt were well above the aggregate index of chinese debt。
