Zero-coupon convertible bond

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Zero-Coupon Convertible Bond

1. A bond that may be converted into common stock in the company issuing it. A zero-coupon convertible bond is sold at a discount from par and matures at par. They tend to be volatile in the secondary market because the convertible option may or may not become worthwhile, depending on how the company is performing. Additionally, like all zeros, they can fluctuate in price, sometimes dramatically, with changes in interest rates.

2. A municipal bond that may be converted into a corporate bond in the company issuing it. A zero-coupon convertible bond is sold at a discount from par and matures at par. They tend to be volatile in the secondary market because the convertible options may or may not become worthwhile, depending on how the companies they represent are performing. These zero-coupon convertibles are tax-exempt, but are convertible to other bonds that may yield more.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

Zero-coupon convertible bond.

A zero-coupon convertible bond, like other convertible bonds, can be converted into stock in the issuing corporation if the stock reaches the trigger price.

Municipalities may issue tax-exempt zero-coupon convertible bonds you can exchange before maturity for conventional taxable bonds.

The advantage of both taxable and tax-exempt zero-coupon convertibles is that they give you access to a potentially substantial gain for a small initial investment since you purchase the zero-coupon for less than the face value. But like all zero-coupons, these convertibles tend to be more volatile in the secondary market than nonconvertible bonds.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
M2 EQUITYBITES-July 4, 2016-LabCorp announces conversion right for zero coupon convertible subordinated notes due 2021
Summary: Oman's Renaissance Services said on Tuesday it will ask shareholders to approve plans for a 40 million rials ($103.9 million) offering of zero coupon convertible bonds.
In this model, they price Liquid Yield Option Notes (LYONs), which are zero coupon convertible bonds callable by the issuer and putable by the bondholder.
* The Company had issued 50.30 million euro Zero Coupon Convertible Bonds due July 2010.
ON Semiconductor, a supplier of silicon for green electronics applications, announced today that it is notifying holders of its outstanding Zero Coupon Convertible Senior Subordinated Notes due 2024 (CUSIP No.
The A Units comprises of a CAD1000 principal amount of zero coupon convertible debenture A (debenture) maturing in two years and 25,000 warrants exercisable at CAD0.05 per share expiring two years from the closing.
A primary purpose of the issue of the Bonds is the refinancing of the JPY250 billion Zero Coupon Convertible Bonds due 2009 issued by the Company in 2002 (International Security Identification Number (ISIN): XS0147563455 and Common Code: 014756345) (the "Existing Bonds").
Total cash and equivalents were $299.5 million at the end of the second quarter and included $154.9 million held in escrow to retire the company's remaining zero coupon convertible debentures, which the company has called for redemption on August 7, 2003.
The guarantees would depend on institutions and bondholders agreeing to restructure pounds 350 million of debt through subordinated zero coupon convertible notes and debt forgiveness.
- Compensation of part of the debt with zero coupon convertible bonds and the interest is included in the bond,
Specifically, Sunbeam is seeking to acquire all of its currently outstanding zero coupon convertible senior subordinated debentures (a type of long-term bond), which are due in 2018, in exchange for newly issued 11 percent senior secured subordinated notes, due in 2011, and shares of Sunbeam Corp.