municipal convertible

Municipal Convertible

A zero-coupon municipal bond that can be converted into an interest-bearing bond under certain circumstances.

Notes:

Also known as "STAIRS" or stepped tax-exempt appreciation on income realization securities.

See also: Convertible Debenture, Municipal Bond, Zero-coupon Bond, Zero-coupon Convertible

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municipal convertible

A unique municipal bond that is issued at a large discount from face value because it pays no interest until a specified date, at which time interest payments begin and continue until maturity. For example, a bond issued in 1988 and due in 2015 might begin paying interest in 1998. Essentially, a municipal convertible is a combination of a zero-coupon bond and an ordinary interest-paying bond. Municipal convertibles are traded under a variety of acronyms including BIGS, CCAB, FIGS, GAINS, PACS, STAIRS^® , and TEDIS, depending upon the underwriter of the particular issue.