Is it good or bad for exchangeable bonds to enter the exchange period?

For the income of exchangeable corporate bonds entering the conversion period, it depends on whether the controlling shareholder wants to get back the shares. If he wants to get his shares back, it is not good before the exchange period expires, because it will deliberately depress the price and make creditors reluctant to exchange shares after the exchange period. If you don't want to take it back, do it before the maturity, because the controlling shareholder will generally give a good price to promote the rise of the stock, so the creditor would rather exchange shares and sell the stock after the maturity. So it will be bad after the expiration, and many stocks will be sold. But basically, the controlling shareholder is unwilling to exchange shares, so once a company issues exchangeable bonds, it is almost bad.

Convertible bond, referred to as convertible bond, also known as convertible bond, is a kind of bond. Can be converted into shares of the bond issuing company, and the conversion ratio is generally determined at the time of issuance. The coupon rate of convertible bonds is usually lower, because the right to convert into shares is the compensation for bondholders. Because when convertible bonds are converted into ordinary shares, the value of the converted shares is generally much greater than the value of the original bonds. However, once converted into stocks, there will be a downside risk and there is no bond hedging function.

Convertible bonds are essentially based on the issuance of corporate bonds, with options that allow buyers to convert purchased bonds into shares of designated companies within a specified period of time. Exchangeable bonds and their underlying stocks belong to different issuers. Generally speaking, the issuer of exchangeable bonds is the holding parent company, while the issuer of the underlying stock is a listed subsidiary. The subject of exchangeable bonds is the shares of subsidiaries held by the parent company, which belongs to stocks. Generally speaking, the issuance of exchangeable bonds will not increase the total share capital of its listed subsidiaries, but after the conversion, it will reduce the shareholding ratio of the parent company to the subsidiaries. Exchangeable bonds provide a low-cost financing tool for financiers. Because exchangeable bonds give investors the right to convert stocks, their interest rate is lower than that of ordinary bonds with the same term and credit rating.

Therefore, even if the convertible bonds are not successfully converted, the issuer's debt repayment cost is not high, which has no impact on listed subsidiaries. Bonds are generally issued by listed companies, which is an important way for enterprises to raise funds. Creditor's rights issued by listed companies can be divided into universal bonds, convertible bonds and repayable corporate bonds. corporate bonds