exchangeable bond


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Exchangeable Debt

A debt security that the holder may exchange, at a certain price, for common stock in the company other than the one that issued the debt security. The number of shares one receives for each security and the price one pays for those shares are determined when the exchangeable debt is issued. Most of the time, the common stock is in a subsidiary of the company that issued the exchangeable debt. Exchangeable debt is a low-risk investment, but it affords the investor a great amount of leeway because he/she can exchange it for another security with higher risk and a higher return. Exchangeable debt operates like a convertible bond; the main difference is the fact that in a convertible bond the common stock that one may buy is the stock of the company issuing the bond rather than that of a subsidiary.

exchangeable bond

A special type of convertible security that permits the holder to exchange the bond for shares of a company in which the issuer has an ownership position. An exchangeable bond differs from an ordinary convertible bond in that a convertible permits the holder to convert it into shares of stock of the issuer.
References in periodicals archive ?
The literature review helps to understand why firms make a decision to raise capital through the exchangeable bond (4).
Purchase the block of convert's stock into which the exchangeable bond is convertible, S.
Most immediately the issuance frees Aabar to settle its Daimler exchangeable bond, allowing it to considerably reduce the cost of its debt.
Abu Dhabi: Aabar Investments has issued debt of a e1/42 billion exchangeable bond with a creative structure that combines Aabar's reputation as a long-term investor with the financial strength of its parent, the International Petroleum Investment Company (IPIC).
Pakistan is all set for issuance of exchangeable bonds of the state-owned Oil and Gas Development Company Limited (OGDCL) - the country's largest petroleum firm- in the international market in a bid to finance the soaring budget deficit.
In this case, NPI purchased the exchangeable bonds and had an option to receive cash by redeeming the bonds or to exchange them for Bellsystem24 shares.
Goldman Sachs International managed the exchangeable bond placement.
ISLAMABAD, July 05, 2011 (Balochistan Times): Referring to reports regarding Oil and Gas Development Company Limited (OGDCL) Exchangeable Bond transaction published/ telecast in a section of print and electronic media during the recent past, a spokesman of the Privatisation Commission (PC) while clarifying the factual situation said that it was the intention of the Government of Pakistan (GoP) to complete the transaction within the previous fiscal year, however, the international financial markets became extremely volatile towards the end of the fiscal year due to the Greece Crisis and weak economic data emerging from USA.
82% of OGDCL shares and plans to monetize up to 10% shares by means of an issuance of exchangeable bond to international institutional investors.
BNP has been added to domestic and global exchangeable bond programme panels and the appointment is effective from Monday, New South Wales Treasury Corporation (TCorp) said.
An exchangeable bond gives the holder the option to exchange the bond for the stock of a company other than the issuer at some future date.
M2 EQUITYBITES-January 24, 2013-GBL to reduce GDF Suez stake via EUR1bn exchangeable bond sale(C)2013 M2 COMMUNICATIONS http://www.