Increase in Stock-Related Bond Exercise Volume Amid Stock Market Rise... Exercise Amount Up 105%

[Asia Economy Reporter Oh Ju-yeon] Following the sharp rise in the stock market after the outbreak of the novel coronavirus disease (COVID-19) last year, the scale of exercising rights on stock-related bonds such as convertible bonds (CB), exchangeable bonds (EB), and bonds with warrants (BW) significantly increased.

According to the Korea Securities Depository on the 13th, the number of stock-related bond exercises in 2020 was 5,982 cases, a 163.9% increase compared to the previous year (2,267 cases), and the exercise amount was 2.8195 trillion won, up 105.8% from 1.3702 trillion won the previous year.

Stock-related bonds refer to bonds issued under predetermined conditions such as exercise price and exercise period, which can be converted or exchanged into the issuer’s shares or shares of another company guaranteed by the issuer at the time of bond issuance.

From the investor’s perspective, if the target stock price falls, stable interest income can be earned by holding the bond, and if the stock price rises, profits can be realized through exercising rights (conversion, exchange, or subscription).

The significant increase in exercising rights on convertible bonds and bonds with warrants last year is presumed to be due to the issuing companies’ stock prices exceeding the exercise prices.

By type, the number of exercises increased by 129.5% to 4,056 cases for convertible bonds (from 1,767 cases the previous year), by 93.2% to 170 cases for exchangeable bonds (from 88 cases), and by 326.2% to 1,756 cases for bonds with warrants (from 412 cases).

By type, the exercise amounts increased by 107.0% to 2.2802 trillion won for convertible bonds (from 1.1018 trillion won), by 25.5% to 251.3 billion won for exchangeable bonds (from 200.2 billion won), and by 322.3% to 288 billion won for bonds with warrants (from 68.2 billion won).

The top stock-related bond exercise amounts in 2020 were Hyundai Rotem’s 30th convertible bonds (235.5 billion won), Doosan Infracore’s 31st exchangeable bonds (49.9 billion won), and CS Wind’s 1st bonds with warrants (39.9 billion won), respectively.

This content was produced with the assistance of AI translation services.