forced conversion

Also found in: Wikipedia.

Forced conversion

Occurs when a convertible security is called in by the issuer, usually when the underlying stock is selling well above the conversion price. The issuer thus assures the bonds will be retired without requiring any cash payment. Upon conversion into common, the carrying value of the bonds becomes part of a corporation's equity, thus strengthening thebalance sheet and enhancing future debt capability.

Forced Conversion

In a callable convertible security, a situation in which the issuer calls the security, which requires the holder to exercise the conversion option and exchange the security for common stock. An issuer may authorize a forced conversion when interest rates decline and it can issue the same amount of debt at a lower cost of capital. However, a forced conversion may not be advantageous to the security holder because common stock is riskier and the combination of dividends and capital appreciation may not equal the coupon rate the holder was receiving prior to conversion.

forced conversion

The call for redemption of a convertible security at a price lower than the market value of the underlying asset into which the convertible may be exchanged. The investor finds it more favorable to exchange the convertible for the underlying asset than to give up the security for cash at the call price. For instance, suppose a $1,000 principal bond with a call price of $1,080 is converted into 20 shares of stock selling at $70 each. The bond is worth $1,400 in underlying stock. If the issuer calls the bond, the investor will be forced to convert before the call becomes effective.
Mentioned in ?
References in periodicals archive ?
The activists shouted anti-Pakistan slogans demanding the United Nations to intervene in Sindh, where the political leaders are being targeted and forced conversion of minorities is rampant.
Whether it is bonded labour or forced conversion or rape and murder, Veerji Kolhi has a sparkling track record of standing by the oppressed and the wronged, perhaps because he is not found wanting in empathy, having been a part of a bonded labour family as a child.
While persecution of Jews had existed in pre-Islamic Iran, the worst of it began with the Safavids' adoption of Shia Islam as the state religion at the beginning of the 17th century, leading to measures including a brutal decree of forced conversion in 16561662 under Shah Abbas II.
The girls, in particular, were at the receiving ends of forced conversion and marriages.
Incidents like lynching, forced conversion, threats and attacks on mosques and churches have increased but the government is turning a blind eye towards it.
Perkovic, whose fans give Nazi salutes at his concerts, is a supporter of the Croat Ustashe - the Nazi allies who during the war massacred Serbs Jews and gypsies, forced conversion of Orthodox Serbs to Catholicism at the point of a gun and whose emblems and slogans are tolerated in today's Croatia - a full member of the European Union.
DPA Islamabad A teenage Hindu girl's alleged abduction and forced conversion to Islam in southern Pakistan has created uproar among the minority Hindu community and sparked debate about religious freedom in the country.
Stories of forced conversion are very few and often not credible enough to warrant academic discussion.
Though there were speculations that it was a forced conversion, the members of the community justified their decision by providing facts.
According to the mover, the bill was present to recognize that forced conversion is an abhorrent, violent and offence and an issue that has become prevalent across the province of Sindh and must be eliminated;
From the March 2014 Renaissance Society of America meeting in New York City, 13 papers consider the impact of the forced conversion of Jews and Muslims in 15th-century Iberia.
Earlier, a plan to implement forced conversion had generated protests from the markets.