Chinese convertible bonds: treat with care

CBs are increasingly popular in China, but some say they are simply another way of abusing minority shareholders.

In the first quarter of this year, for the first time in Chinese capital markets, more cash was raised by convertible bonds CBs than from initial public offerings Rmb5.6 billion $602 million, compared to Rmb5 billion. Last year, there was just Rmb4 billion issued for the whole 12 months.

What has changed this year, and attracted investor interest, are highly advantageous terms, such as the resetting clauses and low conversion premiums. The CBs coming out this year...

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