What Are Debenture Loans?

Bond financing, like stock financing, is a direct financing, while credit financing is an indirect financing. In direct financing, the departments that need funds go directly to the market for financing, and there is a direct correspondence between the borrower and the borrower. In indirect financing, borrowing activities must be carried out through financial intermediaries such as banks. The banks absorb deposits from the society and then lend them to the departments that need funds.

Bond financing

Data from the central bank in 2012 showed that RMB loans increased by 540.1 billion yuan in July, a sharp fall of 379.7 billion yuan from the previous month, far below market expectations, of which non-financial corporate and other sector loans only increased by 355.8 billion yuan.

In sharp contrast, the net financing of corporate bonds for the month was 248.7 billion yuan, an increase of 206.5 billion yuan year-on-year. Another data shows that in the first seven months, the total amount of corporate bond financing reached 1.07 trillion yuan, while the total amount of corporate bond financing in 2011 was 1.37 trillion yuan.

Thanks to the sharp increase in the net financing scale of corporate bonds, the social financing scale reached 1.04 trillion yuan in July, 502.3 billion yuan more than the same period of the previous year.

Bond financing

1. The demand for funds is different In China, government bonds account for a large proportion of bond financing, and enterprises in credit financing are the main demanders.

2. Different fund suppliers There are many channels for governments and enterprises to absorb funds through issuing bonds, such as individuals, enterprises and financial institutions, institutions, institutions, and institutions. The providers of credit financing are mainly commercial banks.

3. Financing costs differ among bonds. Government bond

Bond financing and

Financing margin ratio refers to investors

Debt financing

Debt financing is relatively simpler than equity financing, mainly including guarantee risk and financial risk. Bank loans as the main channel of debt financing generally have three methods: credit loans, mortgage loans and secured loans. In order to reduce risks, secured loans are the most commonly used form of bank.

To borrow money from a bank, you must first find a company with a certain economic strength as a guarantor, and assume joint responsibility for bank loans. When a private company looks for a guarantee company, often the other party requests that you also promise to guarantee the other party to the bank loan. This behavior is called mutual protection. A large number of mutual guarantees can easily form a guarantee circle between enterprises. Once a company has problems in the operation of the circle, it may cause chain reactions and cause other companies to face serious debt risks.

Financial risk mainly refers to problems in the structure of the company's assets and liabilities. When the company uses debt to finance, the increase in financial costs will put a lot of pressure on the business. In theory, if the profit rate of the company's net assets does not reach the borrowing rate, Corporate borrowing will cause losses to corporate shareholders. But more importantly, debt financing will increase the company's asset-liability ratio, thereby reducing the company's ability to refinance debt financing. If the company cannot reduce the asset-liability ratio through operating profit, and obtain sufficient cash flow to pay off the debts due The consequence of waiting for a business may be bankruptcy. Shi Yuzhu's giant group was about to collapse from brilliant several years ago. One of the important reasons is that it did not manage its debt financing well.

1. The possibility of rapid monetary policy relaxation is very small, and it is more difficult for enterprises to obtain a loose financing environment again.

2. The cost of bond financing is relatively low, which can also save companies considerable financial expenses.