Stocks, funds and bonds complement each other in the investment market, and they are all closely related. Many investors will also notice that bonds and stocks can be transformed into each other. The following is whether the debt-to-equity swap arranged by Bian Xiao is negative or positive for the stock price. I hope it will help everyone.
Is debt-to-equity swap bad or good for stock price?
Whether the debt-to-equity swap has a negative or positive impact on the stock price, investors need to look at it in combination with reality.
According to the changes in the investment market, debt-to-equity swaps have no obvious negative or positive effects, mainly depending on whether bondholders are optimistic about the performance and development of stocks. However, judging from the changes brought by debt-to-equity swap, the short-term impact of debt-to-equity swap on stock price is favorable.
Convertible bonds are actually a kind of cash capital increase of enterprises, which increases the company's share capital. For the original shareholders, the number of people participating in corporate dividends will increase, and future dividends will decrease, which is unfavorable to the original shareholders. Since the interest rate of convertible bonds is usually lower than that of ordinary corporate bonds, issuing convertible bonds is conducive to raising capital at low cost, developing corporate business and solving corporate debt problems.
In general, debt-to-equity swap is beneficial to creditors and unfavorable to the first holder. Bondholders can be converted into stocks through debt-to-equity swaps and enjoy all the rights and interests of the company. However, for those who hold stocks in advance, the number of stocks will increase, which will bring certain difficulties to stock speculation.
What is debt-to-equity swap?
Debt-to-equity swap refers to the establishment of financial asset management companies by the state, the acquisition of non-performing assets of banks, and the transformation of the original creditor-debtor relationship between banks and enterprises into the equity and property rights relationship between financial asset management companies and enterprises.
After the creditor's rights are converted into equity, the original interest is converted into current dividends by shares. In fact, the national financial asset management company has also become a holding shareholder in stages, and can exercise the rights owned by shareholders in accordance with the law and participate in the company's major decisions. However, it should be noted that those who do not participate in the normal production and operation activities of enterprises can recover their funds through asset reorganization, listing, transfer or enterprise repurchase after the economic situation of enterprises improves.
How to operate debt-to-equity swap
In practice, the operation of debt-to-equity swap can actually be divided into two types:
First, the debtor increases capital and shares, which means that when the company needs funds, it needs shareholders to contribute, and then as a debt-to-equity swap member, it may not invest or increase capital;
The other is that the equity of other companies can be transferred, and the creditors are fully or partially exempted from debts.
As a creditor, no matter how to operate, whether to convert debt into equity or consider the company's development prospects before making a decision, there are five issues that need attention:
(1) Debt-to-equity swaps can only be converted into shares during the conversion period;
(2) Debt-to-equity swap is to convert one's own bonds into equity without any cost;
(3) Under normal circumstances, debt-to-equity swaps have an early redemption clause. When the company issues a redemption announcement, investors holding convertible bonds must pay attention to timely debt-to-equity swaps or directly sell convertible bonds;
(4) Attention should be paid to the tax payable on debt restructuring;
(5) With regard to the handling of the debt-to-equity swap bond investment account, the debtor shall recognize the total par value of the shares enjoyed by the bondholders for giving up their creditor's rights as capital stock, and the difference between the total fair value of the shares and the capital stock shall be recognized as capital reserve, and the difference between the book value of the restructured debt and the fair value of the shares shall be included in the current profit and loss.
What are the main points of debt-to-equity swap?
1, focusing on solving large and super-large national key enterprises that play an important role in economic development;
2. Support enterprises undertaking national key projects in recent ten years to reduce the debt burden, and urge them to increase production, increase efficiency and upgrade industries as soon as possible;
3. Focusing on the two major goals of three-year reform and extricating large and medium-sized state-owned key enterprises from difficulties, we will promote qualified enterprises in loss-making enterprises to turn losses into difficulties. The goal of extricating state-owned enterprises from difficulties is arduous, and the debt problem is one of its main obstacles. After the debt-to-equity swap, the enterprise does not need to repay the principal and interest, and the burden is reduced accordingly; At the same time, the balance sheet tends to be healthy, which is convenient for enterprises to obtain new financing. Moreover, debt-to-equity swap touches the property right system of enterprises and promotes enterprises to establish new operating mechanisms as soon as possible.
4, the social shock is small, and it is easy to get support from all parties. Debt-to-equity swap takes into account the interests of finance, banks and enterprises. The conversion of CDB's creditor's rights into equity is not a simple debt write-off, but a change in the way of debt repayment, from loan relationship to non-debt-paying investment cooperation, which has not increased financial expenditure, reduced the debt-paying burden of enterprises, and the bank has also obtained the right to operate. This is a debt restructuring scheme with the lowest practical cost and little social shock, so it can be used on a large scale and is conducive to getting rid of the debt crux of national banks and state-owned enterprises in a short time.
Debt-to-equity swap is essentially the establishment of financial assets by state-managed companies. After the debt-to-equity swap is converted into equity, the previous principal and interest have been converted into dividends according to equity.