That is, the creditor's rights assets held by banks will be converted into equity investment in enterprises. In the economic downturn, debt-to-equity swap has two main functions: one is to reduce the non-performing loan ratio of banks; The second is to help enterprises de-leverage and reduce business pressure. Is it good or bad to convert convertible bonds into shares?

The purpose of converting convertible bonds into stocks

By converting creditor's rights into equity, commercial banks can strive to restore the profitability of loan targets, improve their financial health and preserve the bank's assets as much as possible; However, the operating conditions of indebted enterprises are expected to improve after the financial pressure is eased.

Is it good or bad to convert convertible bonds into shares?

1. For banks, the only advantage of debt-to-equity swap is that it can reduce the increasingly ugly non-performing loan ratio and make the short-term profits of banks look higher. But this method can't change the essence, and the real situation of its assets is still problematic.

2. If the operational risk caused by the careless operation of debt-to-equity swap leads to the crisis of the banking system, it will undoubtedly bring more serious consequences.

3. For investors who are optimistic about the market, convertible bonds have the opportunity to obtain a higher level of expected returns, but their risks have also increased.

4. For the company, investors have changed from creditors to shareholders, reducing the company's operating pressure and debt level.