The dual attributes of convertible bonds, such as equity and debt, make it "the benefit of fishermen", and the convertible bond market itself has entered a new stage with more prominent equity from the previous balance of equity and debt. The recent good trend of convertible bonds is mainly related to its bright performance.
The factors that affect the value of convertible bonds mainly include: pure debt value, yield to maturity, pure debt premium rate, conversion value and conversion premium rate. The first three are debt indicators of convertible bonds, and the last two are stock indicators of convertible bonds.
The value of pure bonds mainly reflects the value when investors invest convertible bonds as ordinary corporate bonds. Converting convertible bonds into present value according to their coupon rate and maturity face value (generally 100) mainly involves the choice of discount rate. Because the remaining life of convertible bonds is known, the yield curve of national debt is relatively complete at present. Therefore, according to the remaining years, we can find the corresponding rate of return in the yield curve of government bonds, plus the reasonable spread between government bonds and corporate bonds.
Yield to maturity is equivalent to the yield to maturity calculation method of ordinary government bonds and corporate bonds, that is, how high the discount rate is needed to convert the cash flow of future periods into the current price (assuming that convertible bonds are held at maturity and there is no stock exchange operation). Of course, the higher the yield to maturity, the stronger the debt of convertible bonds and the higher the security of investment.
Pure debt premium rate is the premium degree of the present value of convertible bonds relative to their pure debt value. Formula = (convertible bond price-pure debt value)/pure debt value × 100%. The higher the premium rate of pure debt, the greater the imaginary part of convertible bonds and the greater the possibility of future decline.
Calculation formula of conversion value = 100/ conversion execution price × current stock price. Represents the present value of convertible bonds held by investors after being converted into stocks at the execution price. The higher the conversion value, the stronger the current stock price trend and the higher the future investment value of convertible bonds. However, sometimes the price of convertible bonds is often higher than the conversion value because of the strong expectation of the market for the future rise of convertible bonds. At this time, the premium rate of convertible bonds is needed to measure the investment value of convertible bonds.
The conversion premium rate refers to the premium degree of the convertible bond price relative to the conversion value, and its calculation formula is = (convertible bond price-conversion value)/conversion value × 100%. The higher the conversion premium rate, the higher the expansion of convertible bond price relative to the current share price. Although there is an expectation that the market will further push up the stock price, the higher the bubble composition, the greater the uncertainty of the convertible bond market outlook.