Advantages:
1. source of funds: issuing convertible bonds can provide a large amount of funds for listed companies and help meet the company's capital needs. These funds can be used for project expansion, new product research and development, debt restructuring and so on.
2. Low interest rate: Compared with issuing bonds or loans, the interest rate of convertible bonds is usually lower, so listed companies can obtain funds at a lower cost.
3. Deferred repayment: Convertible bonds usually have a long term, which provides the company with certain flexibility. Companies can repay their debts in a longer period of time and reduce the short-term debt repayment pressure.
4. Share conversion: convertible bond holders have the right to convert convertible bonds into common shares of the company in order to share the future growth and potential benefits of the company. This will also help attract investors and increase the company's shareholder base.
Disadvantages:
1. Interest payment: The issuance of convertible bonds needs to pay interest to bondholders, which increases the financial burden of the company to some extent.
2. Shareholder pressure: If a large number of convertible bonds are converted into ordinary shares, it will lead to changes in the company's shareholder structure and may also increase the pressure on the company's management.
3. Market fluctuation: Convertible bonds are usually affected by market price fluctuation. If the share price is lower than the conversion price, investors may be reluctant to convert shares, and the company may not enjoy the potential benefits.
Generally speaking, issuing convertible bonds can provide listed companies with capital sources and flexibility, but there are also risks such as financial burden and shareholder pressure. Therefore, whether to issue convertible bonds needs to be evaluated according to the specific situation and needs of the company.