What is the difference between a forced redemption and a resale of convertible bonds?

As follows:

1. Forced redemption is the right of the issuing company, and when the forced redemption clause is triggered, the company has the right to redeem the convertible bonds in the market, or it may not redeem them. Forced redemption generally occurs when the company's stock price is significantly **, in order to prevent investors from converting to more ** and diluting the shareholders' equity, so early redemption.

2. Resale is the right of investors, which can be resold or not. Buybacks generally occur when the company's stock price is sharply**, and the issuing company provides investors with an opportunity to stop losses in advance. Of course, when the bond matures, it is also possible to repay the principal and interest.

Introduce. Convertibility is a convertible bond.

Bondholders can convert bonds into ** on agreed terms. Conversion is an option that investors enjoy that is not available in ordinary bonds. Convertible bonds are expressly agreed at the time of issuance, and bondholders can convert the bonds into ordinary bonds of the company in accordance with the ** agreed at the time of issuance**.

If the bondholder does not want to convert, they can continue to hold the bond until the repayment period expires to receive the principal and interest, or liquidate it in the liquid market**.

Convertible bonds are mandatory and belong to the rights of listed companies, which refers to the fact that the issuer of convertible bonds can redeem convertible bonds in advance in accordance with the provisions of the prospectus if certain conditions are met. The resale of convertible bonds is non-mandatory, belongs to the rights of investors, and is an additional clause when listed companies issue convertible bonds, the main purpose of which is to provide investors with a guarantee of security. Convertible bond ** company, specifically the national finance **, this company's wealth management products accurately match services.

Compulsory redemption of convertible bondsGenerally, if the listed company has at least 15 consecutive trading days for at least 15 trading days, it will trigger the compulsory redemption conditions of the listed company's convertible bonds. Convertible bond resaleGenerally, when the listed company** in the last two interest-bearing years for any 30 consecutive trading days is less than 70% of the current equity conversion**, the holder of the convertible bond has the right to sell back all or part of the convertible bond held by the issuer at the face value of the bond plus the current accrued interest**. When the convertible bond triggers the redemption clause, the investor can choose to sell back or not to sell back, and if it is not re-sold, it can wait for the bond to mature and repay the principal and interest.

If you want to know more about convertible bonds, we recommend consulting IFC**. Since its establishment, IFC** has strictly abided by various laws and regulations, continuously improved the corporate governance structure, established a relatively sound internal control system, and always adhered to compliance management and steady operation; The overall status and market competitiveness of the company's compliance and risk management are at the leading level in the industry, and it has been rated A in the information disclosure evaluation of listed companies on the Shanghai Stock Exchange for five consecutive years, and has been highly praised in the industry.

All listed convertible bonds have a "mandatory redemption clause". When this money is triggered, the listed company that issued the convertible bonds has the right to recover the remaining convertible bonds of the company in the Danxiang market with the established redemption**. For example, when the market ** of AB convertible bonds is located at 166 yuan, the listed company AB issued an announcement that two weeks later, it will be forced to redeem the AB convertible bonds that are still well contained with a redemption of 102 yuan**.

If the investor holding the AB convertible bond does not convert the convertible bond into the ** of AB company, nor does he sell the convertible bond in the secondary market, then after two weeks, if the market ** of the AB convertible bond is still 166 yuan, the investor will bear a net loss of 64 yuan per convertible bond unit when the redemption is triggered.

It refers to the operation of the issuer to make a mandatory redemption to the holder of the convertible bond according to a certain ** when the convertible bond triggers the early redemption condition, and the probability of the loss of the convertible bond is relatively high, and the investor can sell or convert shares in advance to avoid losses. Disperse.

It refers to the operation of compulsory redemption of convertible bonds by the issuer in accordance with a certain ** to sell convertible bonds and argue for compulsory redemption by someone when the convertible bond triggers the early redemption condition, and the probability of loss of the convertible bond is relatively large, and investors can sell or convert shares in advance to avoid losses.

Compulsory redemption is subject to certain conditions:

1. Convertible bonds must enter the equity conversion period, and cannot be forcibly redeemed without entering the equity conversion period;

2. When the underlying stock price of the convertible bond is higher than 130 for 15 to 20 consecutive days, it will be forcibly redeemed;

3. When the underlying stock price of the convertible bond lasts for about 30 days and is lower than 70 80 of the conversion price, it will be forcibly redeemed.

A convertible bond is a bond in which the bondholder can convert the bond into an ordinary bond of the company as agreed at the time of issuance. If the bondholder does not wish to convert, he or she can continue to hold the bonds until the maturity of the repayment period and receive the principal and interest, or liquidate them in the liquid market**. If the holder is optimistic about the potential of the bond issuer to increase its value, he or she can exercise the right to convert the bond into ** according to the predetermined conversion after the grace period, and the bond issuer shall not refuse.

The interest rate of the bond is generally lower than the interest rate of the bond of ordinary companies, and the issuance of convertible bonds by enterprises can reduce the cost of financing. Holders of convertible bonds also have the right to sell the bonds back to the issuer under certain conditions, and the issuer has the right to forcibly redeem the bonds under certain conditions.

Convertible bond redemption simply means that the company that issues the convertible bond wants to forcibly redeem the convertible bond in your hand, wants to repay the interest less, and guides everyone to convert the convertible bond into ** and become a shareholder of its company, so that the company can not repay the interest, because you have become a shareholder of his company.

Generally speaking, when a listed company issues convertible bonds, it hopes that investors will convert it into shares. For this purpose, the convertible bonds also have a foreclosure clause. The redemption terms of the CITIC convertible bonds are:

In any 30 consecutive trading days, for 15 trading days, the ** price is higher than 130% of the conversion price, and the issuer has the right to redeem the convertible bond at the rate of 100 yuan plus corresponding interest. The purpose of this clause is to encourage investors to transfer shares. If the investor does not convert the shares, the issuer will redeem the convertible bonds, and the investor can only get 100 yuan of principal plus a little interest.

However, if you transfer shares, you can generally get a transfer value of more than 130 yuan. When the company issues a forced redemption announcement, it means that the life of the convertible bond has entered the countdown and is about to withdraw from the market, investors can choose to sell in the secondary market for cash, or they can transfer shares to exit, and do not continue to hold, otherwise there will be a lot of losses. Choose one with a premium rate of less than 25%.

The low premium rate indicates that the equity of the convertible bond is good, and the **** can keep up, of course, the big fall will follow, but there is debt protection, and the decline is not as big as the first.

However, according to the relevant provisions of the Implementation Rules for the Convertible Corporate Bond Business of Shenzhen ** Exchange, if the circulating face value of "Junda Convertible Bonds" is less than RMB 30 million, the trading will be suspended three trading days after the relevant announcement issued by the company, so the cessation of trading of "Junda Convertible Bonds" may be advanced.

On January 10, the price of the "Junda Convertible Bonds" was RMB, which was very different from the forced redemption price of RMB.

In addition, Zhengyuan Wisdom and Xintian Pharmaceutical have recently issued similar suggestive announcements, all of which said that the company has recently exceeded 130% of the current conversion of shares for 10 consecutive trading days, and if the conditional redemption clause is triggered in the future, it will be in accordance with the relevant regulations, and the company has the right to decide to redeem all or part of the convertible bonds that have not been converted into shares according to the face value of the bonds plus the accrued interest of the current period.

Convertible bond forced redemption means that the issuer of convertible bonds has the right to forcibly redeem the bond under certain conditions, and the purpose of this clause is usually to allow the convertible bond to be converted when the stock price rises well, otherwise there is a possibility of losing money. Convertible bonds generally refer to convertible bonds, which are bonds in which bondholders can convert bonds into ordinary bonds of the company in accordance with the agreement at the time of issuance.

When investing in convertible bonds, you need to have an account, which is similar to the user's purchase, and the user can place an order by entering the convertible bond and the quantity when purchasing. The convertible bond subscription here can be subscribed without market value, without capital, and at zero cost, and T+0 trading, which many investors will pay attention to.

Convertible bonds have three characteristicsThey are creditor's rights, equity, and convertibility;Equity refers to the fact that after the conversion to **, the original bondholders have become shareholders of the company from creditors to shareholders, and can participate in the company's business decisions and dividend distribution, which will also affect the company's share capital structure to a certain extent.

The right to convert convertible bonds is enjoyed by investorsIf the bondholder does not want to convert, he can continue to hold the bond until the repayment period expires to receive the principal and interest, or to cash in the circulating market.

The compulsory redemption of the convertible bond means that the convertible bond issuing company turns all the creditors into shareholders, that is, the convertible bond becomes **. There is a clause for the compulsory redemption of the convertible bonds, that is, if the company** is not less than 130% (including 130%) of the current equity conversion ** for at least fifteen trading days in any thirty consecutive trading days, then the company will trigger the mandatory redemption clause, and later it will issue an announcement to convert these debts into **.

Of course, in this link, the holder of the initial convertible bond earns at least 30% of the profit, so this is not a bad thing for investors. When the company determines a redemption date, investors have several options:

First: hold the maturity and obtain the principal and interest directly according to **.

Second: sell the convertible bonds and cash out the profits directly.

Third: directly transform into ** and become a shareholder.

Foreclosure conditions for convertible bonds:

1. During the period of convertible bond to equity, the company has at least 15 or 20 trading days higher than 130% of the convertible bond in 30 consecutive trading days.

2. The amount of convertible bonds issued this time is less than 30 million yuan. Compulsory redemption of convertible bonds gives the issuer the right to forcibly redeem the convertible bonds that have not been converted into shares by investors when the bonds reach a certain limit.

The second article does not need to be seen, it is of little significance, the key is that in the first article of the 30 consecutive trading days, at least 15 or 20 trading days are higher than the convertible **130%! Where there are rules, there are opportunities, eternal and unchanging laws.

The inevitability of the forced redemption script.

Foreclosure Script: This is the original definition I gave. The issuer has a natural gene that does not want to repay the money, and will find a way to trigger the forced redemption condition to force the debtor to convert the debt into equity in disguise!

Thinking from another perspective, we understand that we can borrow money from bonds issued by virtue of our ability to issue bonds, and we can turn debtors into shareholders by relying on rules. Absolutely impossible, unless the brain w/ ......

Why is the forced redemption triggered, and the debtors will inevitably exchange shares?

This question is very important, and this is the underlying core logic of our forced redemption playbook.

For example, if a convertible bond issued by a company enters the period of equity conversion (generally 6 months later), as long as the first trigger condition for forced redemption is reached by pushing the stock price, the forced redemption announcement can be issued. At that time, the convertible bond** may be between 130-160, but the annual interest rate of the convertible bond may be less than 1%.

There are three options left for creditors: 1. Sell the convertible bonds at the daily market price before the forced redemption expires. 2. Wait for the forced redemption to expire, and the debt-to-equity swap (generally cost-effective).

3. When the forced redemption expires, no share exchange, so that the company can repay the principal and interest (generally a huge loss). This should be no one will go, the repayment of principal and interest is 100 + current interest, and it is generally 101-102 top of the sky, so no one will go.

Therefore, after the forcible redemption is announced, there are only two ways, no matter how you choose, it will be beneficial to the issuer, and the debt will definitely not have to be repaid anyway......

After a wave of popular science, everyone should be able to understand the forced redemption script of convertible bonds. After understanding the underlying logic, all that remains is to go to the 300+ convertible bonds to find those targets who exist in the forced redemption script.

How to find a target, I will briefly share:

1. Don't look at the fact that the underlying stock has far exceeded the conversion price, these have completed the forced redemption conditions, and the forced redemption announcement can be issued at any time, and the issuer has already won, so there is no potential opportunity.

2. Don't look at the underlying stock ** far below the conversion price, these are still far from the forced redemption conditions, and the forced performance will be very difficult, and the convertible bond has a duration of 5-6 years, so it will not be in a hurry.

3. If the underlying stock is close to the conversion price, this is our goal! The reason is very simple, as long as the underlying stock price exceeds the conversion price by 30% and insists on 15-20 trading days within a month, the debt will not be repaid, which is a huge attraction for the issuer!

Redemption of convertible bonds means that the issuer may, after a period of issuance, repurchase its unexpired convertible corporate bonds in advance in accordance with the effective conditions of the redemption terms. The redemption behavior usually occurs when the company's market price is higher than the conversion of shares for a period of time to reach a certain range (internationally the market stock price usually reaches or exceeds 100%-150% of the conversion of shares as the increase limit, and the increase is required to last for 30 trading days as a redemption condition), and the company buys back the unconverted ** according to the pre-agreed **. The redemption** is generally defined as 103%-106% of the face value of the convertible bond, and the closer to the maturity date of the convertible bond, the lower the redemption**.

Further information: There are two common early redemption conditions:

1. The ** price of the underlying stock ** is not less than x% of the transfer of shares ** (x is generally 130) for at least m trading days (m is generally 15) in at least m trading days (n is generally 30) in n consecutive trading days (n is generally 30). For example, in the 30 consecutive trading days of the company's shares, at least 15 trading days have the ** price not less than 130% of the transfer shares.

2. The balance of convertible bonds is less than a certain value, and the common situation is that the balance is less than 30 million yuan.

In addition, it is important to know that the early redemption of convertible bonds is time-limited and can only be executed during the validity period of the early redemption clause. Generally speaking, the shorter the validity period of the early redemption clause, the more beneficial it is for the average investor.

Convertible bond trading rules.

1. Transaction methods.

Investors need to have an account to be able to buy and sell convertible bonds, and the specific operation is similar to **. **After convertible DAO bonds, investors can hold them until the principal and interest are paid at maturity, or they can be converted into shares. T+0 trading can also be implemented by trading in the secondary market.

2. Transaction**.

The face value of 1 convertible bond is 100 yuan, and the unit of "lot" is declared when trading, and 1 lot is equal to the face value of 1,000 yuan, that is, at least 10 each time. For example, an investor buys 10 convertible bonds with a face value of $100 for $1,100, and the conversion price is $10 per share. Regardless of the handling fee, investors can only earn when the underlying stock price is higher than 11 clouds.

3. Transaction fees.

Investors are required to pay a certain commission and handling fee when buying and selling convertible bonds, ** 2% of the total transaction amount, Shanghai Stock Exchange at RMB 1 (Shanghai) or RMB 3 (non-local) per transaction, and 2% of the total transaction amount when closing after the transaction.