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Brought by delistingRuletonlineCredit risk concerns in the convertible bond market are growing.

On May 24th, Hongda Societe Generale (ST Hongda), which has withdrawn from the A-share market, and the convertible bonds issued by the company began to be listed for sale in the delisting sector. On the same day, the transfer price of the company's shares fell by 3.Ruletonline.45% to 0Ruletonline.56 yuan per share, the total market value dropped to 1.748 billion yuan. Hongda's debt refund fell 76%, and the transfer price fell to 10.068 yuan per piece.

At present, among the convertible bonds with credit risk, Soute refund, Blue Shield refund and Hongda refund have all been delisted and listed in the delisting section for transfer. In addition, Zhengbang convertible bonds and Quanzhu convertible bonds are convertible bonds maturing ahead of schedule due to the acceptance of bankruptcy applications, and the final result is small cash settlement.

Market analysts point out that the credit risk of convertible bonds is essentially due to the weak qualification of underlying stocks. with the development of China's convertible bond market, the credit risk of some weakly qualified convertible bonds is gradually exposed, and the actual forms and results are diversified.

Plunge 76%

With the emergence of delisting and default convertible bonds, the credit risk of convertible bonds has been paid more and more attention by the market, and the relevant convertible bonds have fallen sharply recently.

On May 24, the first trading day of Hongda's withdrawal, the transfer price fell 76.10% to 10.068 yuan compared with the pre-delisting price of 42.12 yuan.

Convertible bonds fell sharply, mainly because investors were worried about the possible credit risk of the company. According to the company announcement, due to the large amount of debt overdue, there are some bank accounts, assets frozen or bank deposits deducted, the company is short of cash, resulting in restrictions on the development of the company's business, and significant uncertainty in the company's sustainable operation.

The company's main business is the production and sales of basic chemical products such as PVC and caustic soda, and the related business entities are Wuhai Chemical, Zhonggu Mining and other subsidiaries. Up to now, the main business entities mentioned above have been ruled by the court to accept bankruptcy liquidation or bankruptcy reorganization and have been taken over by the bankruptcy administrator, and the company has lost its control over it.

In addition to losing control of the above-mentioned main business operators, at present, the company's capital liquidity is tight due to the debt crisis, and some employees leave because of wage arrears. Due to huge debt default, failure to perform judgment obligations and other reasons, major bank accounts are judicially frozen, some assets are preserved or enforced by the court, and the company's business is at a risk of standstill.

With regard to the possible default risk of Hongda's debt refund, the company reminds investors that the company's current available currency fund balance cannot cover the remaining par value of Hongda's debt refund. Some bank accounts and assets of the company have been frozen / sealed by the court. If the subsequent Hongda debt withdrawal triggers the resale clause and is close to the principal and interest payment date, the company has the risk of debt default due to lack of liquidity.

When the company delisted, the number of convertible bonds was 3.3687 million. Calculated according to the face value of 100 yuan each, the balance of convertible bonds was about 337 million yuan, of which about 3.3596 million convertible bonds had been confirmed.

How to identify credit risk?

Before 2020, convertible bonds mostly withdraw from the market in the form of equity conversion, and convertible bonds due are relatively rare. Previously, the conditions for the issuance of convertible bonds were relatively strict, and the issuers of convertible bonds were generally better qualified, mostly through subsequent share prices rising and redemption in advance to promote conversion. In addition, the convertible bond is protected by the next revision clause, even if the subsequent performance of the underlying stock is weak, we can also revise the stock price to enhance the willingness of convertible bond investors to convert shares.

Since 2020, the delisting of underlying stocks and the spread of credit debt default risk have led to a sharp fall in the price of convertible bonds and payment risks have begun to attract market attention. In 2020, Huifeng convertible bonds were suspended from listing because the issuer lost money for two years in a row, because it was in the last two-year redemption period and triggered a strong redemption and delisting.

Since 2023, the credit risk of convertible bonds caused by delisting and bankruptcy restructuring has been continuously concerned by the market. Soute debt withdrawal, Blue Shield debt withdrawal and Hongda debt withdrawal have all been delisted and listed in the delisting section for transfer. Zhengbang convertible bonds, Quanzhu convertible bonds, etc., due in advance due to the bankruptcy and reorganization of the underlying shares, shall be paid in accordance with the ordinary creditor's rights according to the settlement plan.

At present, the identification of convertible bond credit risk has become the key to the current problem. Minsheng Securities believes that investors can pay attention to key information such as exchange concern letters, inquiry letters, and issues of concern issued by credit rating companies. On the one hand, there is an obvious decline in revenue, net profit and cash flow of operating activities in most companies, and the main reason for the decline in profits or losses of some companies is the large amount of provision.RuletonlineAsset and credit impairment losses. On the other hand, the related parties such as controlling shareholders infringe upon the interests of listed companies through the occupation of non-operating funds, which is also the focus of supervision, which is common in the companies where the proportion of controlling shareholders' pledge is high and the phenomenon of "high deposit and loan" exists. This is also in line with the listed companies'"other risk warnings" and other related situations, or has a better observation guidance.