Contingent conversion trigger(redirected from Contingent Conversion Triggers)
Contingent conversion trigger
Used in the context of convertible instruments. The price of the stock must exceed the trigger price before the bond holder can convert to common stock at a pre-established conversion price. The trigger price exceeds the conversion price. In addition, after a certain number of years, the convertible instrument usually specifies that both the conversion price and the contingent conversion trigger will increase every year by, for example, a rate equal to LIBOR.
Contingent Conversion Trigger
In contingent convertible bonds, the price that the underlying stock must reach before conversion is allowed. All convertible bonds have a conversion price, which is the price one pays in order to exchange the bonds for stocks. Contingent convertible bonds, however, have a second, higher price that the underlying stock must meet before a bondholder is allowed to convert. This is called the contingent conversion trigger. For example, the conversion price for a contingent convertible bond may be $10 per share, but if the stock price is above $20 per share, the investor may not convert the bond. In this case, the contingent conversion trigger is $20. See also: Provisional Call Trigger Price, Trigger Price.