"Not redeeming in advance" has gradually become the norm of convertible bonds of listed companies.

since September 1st, nine convertible bonds, including "Xinquan Convertible Bonds", have been announced not to be redeemed in advance, especially "Aojia Convertible Bonds", which has not triggered the conditional redemption clause.

"It's rare to announce not to redeem in advance without triggering the redemption clause. At present, in this market environment, people may think that converting into equity will cause dilution. It also reflects that listed companies have more confidence in their own stock prices, and they can still trigger redemption in the future. " A public convertible bond fund manager in Shanghai said.

CBN learned in the interview that the decision of not redeeming convertible bonds in advance is a comprehensive decision made by listed companies after triggering the redemption clause. The reasons for not redeeming in advance include: the duration of convertible bonds is short, the listed company has made arrangements for project funds, and the balance of convertible bonds is low, so it is not necessary to convert shares through early redemption clause.

Not redeeming in advance is becoming more and more common

Eight convertible bonds, including Aojia convertible bonds, have been announced not to redeem in advance since September. If the time is further extended, since July, many convertible bonds have issued announcements not to redeem in advance after triggering the compulsory redemption clause.

For example, Xinquan Co., Ltd. (63179.SH) announced at least four times that it would not exercise the right of early redemption, and Ai Hua Group (63989.SH) also announced three times that it would not redeem "Ai Hua Convertible Bonds" in advance.

Up to now, 3 convertible bonds have issued announcements of not redeeming in advance this year, among which Changxin convertible bonds, Guangdian convertible bonds and Lily convertible bonds also issued announcements of not redeeming in advance in 219.

CBN noted that after the previous market rise, a batch of convertible bonds triggered redemption conditions. In this case, since July, it has become a common phenomenon for listed companies to choose not to redeem.

"judging from the characteristics of convertible bonds issued by listed companies that choose' no redemption' in the announcement, most of the convertible bonds issued by these companies have the characteristics of small remaining scale, long distance from the resale period and low interest expense on convertible bonds." A convertible bond trader in Shanghai told CBN.

statistics show that among the convertible bonds that are not redeemed, the balances of Liande convertible bonds, Zhonghuan convertible bonds, Tongguang convertible bonds and Liantai convertible bonds are not more than 2 million, and the profits convertible bonds and Jingrui convertible bonds are less than 1 million.

Especially on the evening of September 11th, Aojiahua (2614.SZ) announced that, considering the current intrinsic value and the company's current project construction investment fund needs, the company decided not to exercise "Aojia Convertible Bonds" in the next 12 months (from September 1th, 22 to September 1th, 221) if the conditional redemption clause agreed in the prospectus is triggered. It is particularly noteworthy that Aojia convertible bonds did not trigger the conditional redemption clause at this time.

"After the public announcement of redemption, the listed company should prepare corresponding funds as a response in the short term. Therefore, listed companies are not willing to redeem in advance because of their own capital costs; In addition, the remaining unconverted balance of convertible bonds is small, and even if the conversion is not promoted by redemption, the smooth withdrawal of convertible bonds can be realized. There is no need to issue a redemption announcement and prepare corresponding redemption funds. " The Shanghai convertible bond trader said.

Relevant persons from the fixed income department of Furong Fund told CBN that this year, the GEM refinancing policy was relaxed, and a large number of companies issued fixed-income plans to replenish funds. Redemption of convertible bonds may affect the company's refinancing progress.

"In the long run, listed companies tend to convert investors into shares to reduce the number of surviving bonds and financial costs. If the conversion is not as expected, the company will probably start the redemption clause and accelerate the withdrawal of debt-to-equity swaps." The person also said.

the risk of "non-redemption" of convertible bonds

was dragged down by the stock market, and convertible bonds also fell to a great extent in the past week.

to a certain extent, the announcement does not redeem the convertible bonds in advance, which has a certain positive effect on the stocks. The logic is: promoting the conversion of shares through early redemption clause is the mainstream way to realize the delisting of convertible bonds, and announcing early redemption will accelerate the conversion of shares into debt-to-equity, which will generate certain selling pressure on the shares, and announcing not to redeem in advance can slow down the conversion speed and slow down the impact on the shares.

"Under the vision that convertible bonds are unwilling to pay back the money to trigger forced redemption, listed companies tend to be more willing to maintain their share prices, which makes the holders of stocks and convertible bonds more confident in their share prices. This is a virtuous circle." The above-mentioned Shanghai convertible bond traders further said that for listed companies, the conversion progress of convertible bonds will surge after redemption, and at the same time, a large number of new stocks in the short term will bring similar selling pressure of "lifting the ban", coupled with the dilution effect of convertible bonds on stock issuance, which may eventually impact the stock price when the market is good.

It should be noted that although there has been a wave of adjustment in the stock market recently, the performance of convertible bonds is mediocre. However, due to no price limit, T+ and other factors, convertible bonds can easily become a "paradise" for hot money, which seems to be full of risks as well as opportunities, especially convertible bonds that are announced as "not redeemable".

analysts say that the reason is that most of the convertible bonds issued by these listed companies that have announced "no redemption" are small in scale and far from the resale period, so they not only have liquidity risk, but also have greater risk of being speculated by hot money, which often makes these convertible bonds have strong "shares".

According to relevant persons in the fixed income department of Furong Fund, convertible bonds announced as "not redeemable", especially those with low unconverted balance, may have certain risks.

For example, Jingrui convertible bonds with a remaining balance of less than 1 million were heated by a wave of hot money in March, and the single-day turnover rate of Jingrui convertible bonds was as high as 8719.21%. And this kind of excessive speculation of hot money, intended to harvest retail investors crazily, also caused the convertible bonds to deviate from their own intrinsic value.

"This kind of convertible bonds often change hands in a very high frequency, and the characteristics of speculation are extremely obvious. The convertible bonds after the surge have a very high overall premium and show very strong speculative characteristics, so they are not a good investment variety and the investment value is not high. " Some analysts also told CBN that investors should pay attention to the risks of this kind of convertible bond investment, and should make investment decisions based on the fundamentals of listed companies that issue convertible bonds, stock trends and the inherent conversion value of convertible bonds to avoid being harvested by hot money.