Tomorrow (February 17), Zhengyuan convertible bonds will usher in the last trading day, and then will be forcibly redeemed at a redemption price of 100.67 yuan / piece. As of the afternoon of February 16, Zhengyuan convertible bond was reported at 167.907 yuan. If the holder does not seize the last opportunity, it may directly lose up to 40%.
Before the market closes at 15:00 tomorrow, it is the last opportunity to operate!
timely operation to avoid “lying down”
Zhejiang Zhengyuan Zhihui Technology Co.Ltd(300645) recently issued several announcements, suggesting that it will redeem Zhengyuan convertible bonds in advance and reminding Zhengyuan convertible bond holders to pay attention to converting shares within the time limit.
The announcement shows that the registration date of Zhengyuan convertible bond redemption is February 17, 2022, and the redemption price is 100.67 yuan / piece. Before the market closes tomorrow, the holders of Zhengyuan convertible bonds can choose to continue trading in the bond market or convert them into shares of the company at the conversion price of 15.38 yuan / share.
Zhejiang Zhengyuan Zhihui Technology Co.Ltd(300645) said that the redemption price of this convertible bond may be quite different from the market price of Zhengyuan convertible bond, and specially reminded the holders to complete the transaction or share conversion before or on February 17, 2022, otherwise they may face large investment losses.
After the market closes tomorrow, Zhengyuan convertible bonds that have not been converted into shares will be frozen and trading and conversion will be stopped. After this redemption, Zhengyuan convertible bonds will be delisted from the Shenzhen Stock Exchange.
On the morning of February 16, Zhengyuan convertible bonds rose 1.6% to close at 167.907 yuan. Based on this calculation, if investors do not convert shares or sell them in time, and the convertible bonds are forcibly redeemed, each will lose 67.237 yuan, up to 40%.
According to the conversion value, the loss is even greater. According to the Zhejiang Zhengyuan Zhihui Technology Co.Ltd(300645) announcement, each Zhengyuan convertible bond can be converted into about 100 / 15.38 = 6.5 Zhejiang Zhengyuan Zhihui Technology Co.Ltd(300645) shares. In the afternoon of February 16, Zhejiang Zhengyuan Zhihui Technology Co.Ltd(300645) closed at 25.96 yuan, that is, the value of each Zhengyuan convertible bond after conversion is about 6.5 * 25.96 = 168.79 yuan, slightly higher than the closing price of the convertible bond.
convertible bonds ushered in a wave of strong redemption
In February this year, convertible bonds may usher in a wave of redemption. As of February 15, a total of 85 convertible bonds in trading status have triggered redemption terms. In addition to Zhengyuan convertible bonds, 9 convertible bonds have announced that they will be redeemed in advance, and 75 convertible bonds such as Dale convertible bonds have announced that they will not be redeemed.
Prepared by: lianrun
Whether a listed company exercises the right of forced redemption is affected by many factors. Qi Sheng, chief analyst of Orient Securities Company Limited(600958) fixed income, pointed out that choosing strong redemption has the advantages of saving follow-up financial costs, reducing asset liability ratio and thickening the current year’s income in accounting, while choosing not strong redemption is due to the dilution of positive shares by strong redemption of convertible bonds, as well as the selling pressure of convertible bond holders after conversion, which may lead to stock price fluctuations.
Zeng Yu, chief analyst of securities fixed income, analyzed that the call option contained in the convertible bond often amplifies the impact of the rise of the positive stock on the valuation of the convertible bond. Once the positive stock price is adjusted downward under pressure and superimposed with “forced redemption”, the convertible bond whose valuation is far beyond the parity will be killed by the conversion value and the premium rate of the convertible bond.
is the bull market of convertible bonds over?
On February 14, the convertible bond market experienced a major adjustment. The CSI convertible bond index fell 3.02%. On February 15, the CSI convertible bond index fell unabated, down 1.52% to close at 414.32. Is the bull market of convertible bonds over?
Qin Han, chief analyst of Guotai Junan Securities Co.Ltd(601211) fixed income, said that the essence of the recent sharp decline in the convertible bond market is the irrational overvaluation caused by the congestion of convertible bond transactions. In this case, market sentiment is very vulnerable. In addition, under the background of killing both stocks and bonds, convertible bonds are difficult to survive.
According to the analysis of Zhang Xu’s research team, the adjustment range of the convertible bond market exceeded that of the A-share market, or a large number of convertible bonds were sold due to the redemption of some products.
Qin Han said that in the short term, the rise of capital interest rate, the correction of equity market, especially small and medium-sized index, and centralized forced redemption will disturb investor sentiment, bring selling pressure to convertible bonds, and the valuation of convertible bonds may be further compressed. Although the valuation of convertible bonds has experienced significant compression, it is still in a high position and needs to be vigilant.
In the medium and long term, he said, “as a configurable elastic asset of fixed income funds, convertible bonds still have strong attraction, and the space for compression of convertible bond valuation is limited.”
Liu Yu, chief analyst of Gf Securities Co.Ltd(000776) fixed income, analyzed that the evolution of the market still needs to further observe the changes in the strength of positive stock support. If the equity market recovers rapidly in the short term, the compression cycle is expected to end quickly; If the positive stock support continues to weaken, the negative impact may continue further. In this case, strong debt protection and high dividend varieties are the focus of attention in the short term.
Qin Han suggested that under the current situation of many short-term disturbance factors, convertible bonds with relatively low price and valuation and strong certainty of positive stock rise, as well as low-cost varieties with relatively controllable credit risk can be selected.
