(Yicai Global) Sept. 25 -- China's first credit-issued convertible bond, the Beijing Oriental Yuhong Convertible Bond, was released today, with an issuing scale of CNY1.84 billion (USD283 million).
The bonds' will be for six years and the price for redemption on maturity will be CNY106 (USD16). After an issuing period of six months, the bonds can be converted into shares at a price of CNY38.48.
Individual investors are set to benefit most from the rules adjustment made by the Chinese Securities Regulatory Commission to the convertible bond purchase method in September, insiders said. In order to prevent companies freezing capital when issuing convertible and exchangeable bonds, the Chinese securities regulator began forcing companies to issue credit-purchased bonds rather than capital-purchased.
A convertible bond can be converted into shares in the issuing company and typically has a low coupon rate. In essence, it combines a bond and call option which allows buyers to convert the bonds into company stock within a specified time limit.
This means investors do not need to prepay when they apply to buy, they just need to make a payment according to the actual amount confirmed.
Beijing Oriental Yuhong Waterproof Technology Co. [SHE:002271] is the only listed company in China's waterproofing industry. It has grown at an annual rate of 35 percent in revenue and 45 percent in net profit over the last 10 years, profits have grown 52 percent over the past five years. Its core products are water rolling materials and coating products, which also contribute the most to profits.