Convertible bond market continues high temperature, experts remind investors to pay attention to the risk of forced redemption

category:Finance
 Convertible bond market continues high temperature, experts remind investors to pay attention to the risk of forced redemption


However, not all convertible bonds are lucky ones. The reporter of Securities Daily noted that on August 4, on the day of the listing of Benxi Steels convertible bonds, the price fell from 102 yuan to 97.70 yuan at one time, which was the first convertible bond issued on the day of listing this year. By the end of August 11, it closed at 98.53 yuan per sheet, and Benxi Steels convertible bonds were still in the breaking state.

On the issue of what risks should investors pay attention to in the distribution of convertible bond market, Dong zhongyun said that the value basis of convertible bond is its bond value and stock option value. To measure the risk of convertible bond, on the one hand, it can refer to the yield to maturity of pure bond. If the yield drops sharply and turns to negative value, the price of convertible bond has seriously deviated from its pure bond value On the other hand, after the price of convertible bonds rises sharply, the price risk of convertible bonds can be measured by the index of premium rate of convertible bonds. Too high premium rate of convertible bonds means that the price of convertible bonds has deviated greatly from the corresponding value of positive stock price, which is to overdraft the rising potential of future stocks. According to the closing price from August 10 to 11, some convertible bonds which rose sharply in the early stage are in a state of high risk. Once the market and the main stocks are not performing well in the future, the convertible bonds may face greater volatility risk.

In addition, investors should also pay attention to the redemption terms and corresponding mandatory Redemption Risks of convertible bonds. Dong zhongyun explained that the redemption terms are usually as follows: if the closing price of the companys A-share shares is not lower than 130% (including 130%) of the current conversion price for at least 15 trading days in any consecutive 30 trading days, the company has the right to decide to redeem all or part of the convertible bonds which have not been converted shares according to the face value of the bonds plus the current accrued interest. Once investors buy convertible bonds at a high premium, they need to be alert to the risk of a sharp fall in convertible bond prices caused by mandatory redemption.

Looking forward to the future trend of convertible bonds, Liu Xiangdong, Vice Minister of Economic Research Department of China Center for international economic exchange, said in an interview with Securities Daily that it is necessary to note that the convertible bond market is not rising as a whole, but is obviously differentiated. Therefore, the follow-up market may continue this trend of differentiation. Some convertible bonds are still popular, while others may continue to decline, This is related to the value of listed companies.

Source of this article: Yang Qian, editor in charge of Securities Daily_ NF4425