Convertible bonds are bonds of listed companies. You can convert them into stocks according to certain conditions. The issuance of convertible bonds is important. Shareholders' meeting will decide it. They will stipulate specific conversion conditions and methods. They will report to the bonds department for approval.

There are two kinds of convertible bonds. Inseparable convertible bonds. Convertible bonds that can be traded separately.

Inseparable convertible bonds. They refer to the inseparability of equity and bonds. The bondholder converts the bonds into stocks. It is within the prescribed time limit. It is according to the par value of the bonds and the agreed price.

Convertible bonds that can be traded separately. They refer to bonds with warrants when issued. It is a combination of warrants and corporate bonds. The issuance and listing are finished. Corporate bonds and warrants will circulate and trade.

Features of Convertible Bonds:

1. It is a security with stock options. It has the dual features of corporate bonds and stocks. 2. The feature of double option is important. The holder has the right to convert or not. Issuer has the right to redeem it. 3. Validity period. Conversion period. Coupon rate or dividend rate.

Validity period. It is the time from the date of issuance to the date of repayment of principal and interest.

Conversion period: from the start date to the end date of conversion.

4. The interest rate shall be determined by the issuer. It is according to the market interest rate level. It is according to the credit rating of corporate bonds. It is related to the terms of issuance.

5. Conversion ratio, conversion price, redemption clause and resale clause. Conversion Proportion * Conversion Price = Par Value of Convertible Bonds.

6. Redemption is the early redemption of convertible bonds by the issuer.

7. Resale. It means that when the company's shares are lower than the conversion price. It lasts for a certain period. They reach to a certain range. They can be sold to the issuer with the convertible security holder. It is at a price agreed in advance.

8. Amendment clause of conversion price. The nominal price of the stock falls. It is due to the company's stock delivery and other reasons. The conversion price needs to be adjusted.

Significance of Issue:

It saves issuance costs. The interest rate or the dividend rate of preferred shares can be lower. It is lower than that of similar credit bonds. It can reduce the cost of raising funds. It attracts institutional investors. Commercial banks are not allowed to invest in ordinary stocks. Other financial institutions are not allowed to do this. Convertible bonds belong to bonds or preferred stocks.

For investors, convertible bonds are hybrid bonds. There must be systematic risks in ordinary bonds. Non-systematic risks exist in ordinary bonds. The fluctuation of positive stock price is important. It will cause fluctuation to the price of convertible bonds.

From the perspective of fundraisers, convertible bonds are under financial pressure not to be converted. The Company's share price is low during the conversion period. The holder will not convert shares. It will bring financial pressure to company due to centralized payment. At the same time, there is also pressure to sell back. If the stock price is low for a long time, investors will focus on selling bonds back to the issuing company. It is under the condition of designing a resale clause. It will increase the financial payment pressure of the company.