Convertible bond

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Related to Convertible bond: Callable bond

Convertible bond

General debt obligation of a corporation that can be exchanged for a set number of common shares of the issuing corporation at a prestated conversion price.

Convertible Bond

A bond that a bondholder may exchange, at a certain price, for common stock in the company issuing the bond. The number of shares one receives for each bond and the price one pays for those shares are determined when the convertible bond is issued. A convertible bond 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. Certain convertible bonds may only be exchanged at certain points in their lives. The extent to which bondholders exchange convertible bonds is sometimes seen as an indication of whether the share price is overvalued or undervalued. See also: Busted convertible, Overhanging bond, Convertible preferred stock.

Convertible bond.

Convertible bonds are corporate bonds that give you the alternative of converting their value into common stock of that company or redeeming them for cash when they mature.

The details governing the conversion, such as the number of shares of stock you would receive, are set when the bonds are issued.

A convertible bond has a double appeal for investors. Its market value goes up if the stock price rises, but falls only to what it would be as a conventional bond if the stock price falls. In other words, the upside potential is considered greater than the downside risk.

While convertible bonds typically provide lower yields than conventional bonds from the same issuer, they may provide higher yields than the underlying stock.

You can buy convertibles through a broker or choose a mutual fund that invests in them.

References in periodicals archive ?
M2 EQUITYBITES-December 6, 2017-Digitalist reports on conversion of convertible bonds into shares by shareholder Tremoko
The convertible bond market is dominated by US and European companies, issuing approximately 80 per cent of the convertible bond universe.
Example: Nancy Manzi purchased a convertible bond for $800.
62 billion) in convertible bonds worldwide, almost equal to the amount they issued in the whole of 1998, data from the Tokyo Stock Exchange showed.
This study adds to the literature by examining whether firms issuing convertible bonds that are not converted into equity were mimicking when they originally issued the convertible bond.
Union Bancaire Privee (UBP) has announced the appointment of Cristina Jarrin as Senior Portfolio Manager for its Convertible Bonds Team, which is headed up by Jean-Edouard Reymond in Paris, where UBP's centre of expertise for that asset class is based.
A second ETF on European convertible bonds issued by Structured Invest S.
In March 2014, SAS had issued a convertible bond of SEK1.
22 October 2010 - Norwegian rig operator Seadrill (OSL:SDRL) said on Thursday it has hired Credit Suisse (VTX:CSGN), Deutsche Bank (ETR:DBK) and ABG Sundal Collier (OSL:ASC) as the joint bookrunners for its convertible bond offer.
A convertible bond is a type of bond that can be converted into shares of stock in the issuing company, usually at some pre-announced ratio.
Currently, brokerage houses can settle convertible bond deals with each other without actual deliveries.