First, it provides an alternative channel for shareholders of listed companies to conduct market value management and debt financing. Because exchangeable bonds are similar to convertible bonds and detachable bonds, the bonds contain stock options, so their issuance interest rates are generally significantly lower than the interest rates of ordinary corporate bonds or bank loan interest rates for the same period, and the issuer can save a large amount of interest expenses. Under the conditions of full circulation of stocks in the securities market, it is conducive to shareholders to use this financial tool to manage the market value of stocks, and it is also conducive to reducing the situation where major shareholders occupy the funds of listed companies due to lack of financing channels.
The second is to provide a new liquidity management tool for shareholders of listed companies. Shareholders of some listed companies had to sell their stocks to meet immediate needs due to temporary financial difficulties in operations. After the introduction of exchangeable bonds, such shareholders can obtain the funds they need by issuing exchangeable bonds without selling their stocks.
Third, exchangeable bonds lock in the future stock exchange price in advance. This feature determines that most of their holders are investment institutions that are optimistic about the company in the long term, agree with the stock exchange price, and have the ability to judge value. , which is conducive to stabilizing market expectations and guiding long-term and rational investment concepts.
Fourth, it provides institutional investors with new fixed-income investment products, which is conducive to strengthening the connection between the stock market and the bond market. The characteristic of exchangeable bonds is that investors simultaneously receive the option to enjoy interest at the coupon rate and exchange stocks at the exchange price. This makes exchangeable bonds more suitable for investors pursuing stable returns, especially securities investment funds, insurance funds, Social security funds, pension funds, corporate annuities, etc.