SHANGHAI :
China's Risk-Laden Issuers of Private Exchangeable Bonds Surpass Public Ones
Qi Qi
DATE:  May 10 2019
/ SOURCE:  yicai
China's Risk-Laden Issuers of Private Exchangeable Bonds Surpass Public Ones China's Risk-Laden Issuers of Private Exchangeable Bonds Surpass Public Ones

(Yicai Global) May 10 --  China's exchangeable bond market has surged this year with a rise of  private placements, prompted by preferential policies and stock market  rebounds. 

Some 15 out of 18  exchangeable bonds are not listed on a public exchange, making up over  one-half of the total tally of CNY50.1 billion (USD7.3 billion) as of  yesterday, according to Chinese financial information provider Wind.  This year's total is 8 percent more than that of last year. 

Exchangeable bonds differ  from others in ways that the holder may swap the debt instrument for  common stock in a specified third-party company. Private placements of  these securities are usually limited to a certain group of buyers.

Private exchangeable bonds  have higher risks of defaulting and they are less liquid than public  ones, market insiders told Yicai Global, adding that investors must  exercise caution. These securities, in particular, are traded on Chinese  bourses' fixed-income platforms that are not accessible to the public.

The rise of private  placements in the market results from adjustments in monetary policies  in the second half of last year and the recovery of China's mainland  stock markets since the beginning of this year, Liu Zhijia, investment  manager of Muxiao Investment Management, told Yicai Global. Exchangeable  bonds also pose advantages over other tools for listed firms to raise  money, Liu added.

Editor: Emmi Laine 

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Keywords:   Bonds,Exchangeable Bonds,Private Placement