Convertible bonds

Convertible bonds
A convertible bond (convertible) is a bond that can be exchanged for shares on or before maturity. A convertible bond is equivalent to a straight bond plus a warrant: in other words, it contains an embedded option.

Convertible bonds
Bonds that can be converted into common stock at the option of the holder. ...

INVESTMENT VALUE (FOR CONVERTIBLE BONDS) - The value of a convertible bond calculated as a straight bon...
INVESTMENT-GRADE - Most US corporate and municipal bonds are rated by independent services such as Mood...

CONVERTIBLE BONDS:  Bonds that are convertible, at the holder's option, into shares of common stock of the same corporation.
CORPUS:  The property placed in a trust; synonymous with principal.

Convertible bonds contain an option that allows the bondholder to trade in the bond for common stock at a certain price and under certain conditions. Usually, the bond trades for less than the stock so managers buy the bond and short the stock.

Convertible Bonds: An Introduction
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Convertible bonds give the owner the option either to be repaid in cash or to exchange the bonds for a specified number of shares in the corporation.
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Convertible bonds are corporate bonds that you can convert into common stock of the company that issues them rather than redeeming them for cash when they mature.

Convertible bonds are bonds that can be exchanged by the bondholders for a fixed number of shares of the issuing company’s common shares.
Convertible debt ...

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.

* Convertible bonds give holders the right to exchange the bonds for other securities of the issuer at a future date, under prescribed conditions.

For convertible bonds, one of two types of call protection. Hard call protection prohibits an issuer from calling an issue within a certain period of time.

Similar to convertible bonds are Exchangeables, or XB in its abbreviated form. These special types of bonds can be converted in to other shares and not necessarily those of the issuing company.

Appetite for convertible bonds rises
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Issuing convertible bonds is one way for a company to minimize negative investor interpretation of its corporate actions.

With respect to convertible bonds, the value the security would have if it were not convertible apart from the conversion option.
Boning
Charging a lot more for an asset than its worth.

A common term for convertible bonds, which recognizes their equity component and the expectation that the bond will ultimately be converted into shares of common stock.
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provision found in convertible bonds that allows the issuer to call the bond during the period of call protection if the underlying common stock should trade at a specified multiple of the conversion price, called the provisional call trigger price.

The value of these convertible bonds can be greatly affected by features such the right of the company to redeem the bonds prior to maturity and the time period over which the investor has a conversion right.

(3) The exchange of Convertible bonds into shares.
(4) In the foreign exchange sector, the exchange of a credit balance or claim expressed in one currency into a balance or claim in another currency.
Français: Conversion
Español: Conversión ...

Seed money The first contribution by a venture capitalist toward the financing of a new business, often using a loan or purchase of convertible bonds or preferred stock. See: Mezzanine level and second round.

Dollar value at which convertible bonds, debentures, or preferred stock can be converted into common stock, as announced when the convertible is issued. Conversion ratio Mainly applies to convertible securities.

This is the case of preferred stocks and convertible bonds. In general, all financial assets present some typical properties. Financial assets can be used as a medium of exchange or can be converted to money in at little cost or risk.

Diluted earnings per share is earnings per share that fully reflects the impact the firm's dilutive securities (eg, convertible bonds) may have on earnings per share.

Convertible debentures, which are convertible bonds or bonds that can be converted into equity shares of the issuing company after a predetermined period of time.

Convertible arbitrage exploits mispricings of a firm's convertible bonds. Convertible bonds have complex exposures to interest rates, the issuer's credit quality, liquidity spreads, the issuer's stock price, and implied volatility.

In addition, domestic small-capitization equities and high-yield and convertible bonds often trade infrequently and have wide bid-ask spreads.

Convertible Bonds
Convertibles, or convertible bonds, are bonds issued by companies that can be converted into ordinary shares or preference shares at a given...(Read more)
Convertible Term Insurance ...

Effective yield of usable or synthetic convertible bonds determined against the first date at which the warrants can be called. Yield to warrant expiration Applies mainly to convertible securities.

In the case of straight or convertible bonds or preferred stock it's the amount in excess of the par value of the security the issuer may have to pay for the priviledge of redeeming the security before maturity.

To be included, convertible bonds and preferreds must be rated B- or better by Standard & Poor's (quality-related adjustments are made at the end of each calendar year), ...

The price per share at which the holder of convertible bonds, or debentures, or preferred stock, can convert them into shares of common stock.Depending on specific terms, the conversion price may be set when the convertible asset is issued.

Companies issue Foreign Currency Convertible Bonds (FCCBs) in a foreign currency. The bonds are issued for a certain number of years. During the period, investors receive coupon payments (interest).

Examples of such flows are external assistance, foreign (direct and PORTFOLIO) investments, subscription to Global Depository Receipts or EUROCONVERTIBLE BONDS and deposits of non-residents.

zero-coupon convertible Zero-coupon convertible bonds are no-interest bonds issued by a company that... zero-investment portfolio A portfolios with a zero, (or close to zero) net position in the market. This...

Convertibles refer to two forms of similar investments: convertible bonds and convertible preferred stocks. Both the bonds and the stocks owned under this name can be exchanged for a predetermined amount of common stock.

Generally, convertible bonds are coupons paying but there are zero coupon convertible bonds as well. These bonds tend to have lower-than-market rates of interest in exchange for a potential equity stake for the bondholder.

Bond Value definition :
With respect to convertible bonds, the value the security would have if it were not convertible. That is, the market value of the bond minus the value of the conversion option.
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Dilutive security are financial instruments like stock options, warrants, convertible bonds, etc. which increases the number of Common stock, if exercised. It reduces the Basic EPS (Earnings Per Share).

We draw on the considerable resources of CIBC in Capital Markets, Block Trading, Options/Derivatives and Convertible Bonds. Our substantial institutional block trading practice provides timely and efficient execution.

Many different kinds of bonds are available to investors, such as convertible bonds, which may entitle a holder to shares of an issuer's stock. Bond credit-worthiness is commonly rated by Standard and Poor's and Moody's investor services.

Applies mainly to convertible securities. Dollar value at which convertible bonds, debentures, or preferred stock can be converted into common stock, as specified when the convertible is issued.
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Death Spiral - A type of loan investors give to a company in exchange for convertible debt, which, like convertible bonds, typically has provisions that allow investors to convert the bonds into stock at below-market prices.

Bonds that can be exchanged for a company's common shares. Convertible bonds combine the security of bonds with the opportunely to make gains from the appreciation of common stock.
Bonds (Extend/Retract): ...

Convertible preferred stock that may be exchanged, at the
issuer's option, into convertible bonds that have the same conversion features as the convertible preferred
stock.
Euro-medium term note (Euro-MTN) ...

However any sudden conversion of contingent convertible bonds to shares may cause a share sell off which would drive the shareholders fund down. This would most likely push the bank back towards breaching capital requirements anyway.

Diluted EPS is a company's EPS figure as calculated using fully diluted shares outstanding (including the impact of stock option grants and convertible bonds).

Applies mainly to convertible securities. Effective yield of usable or synthetic convertible bonds determined against the first date at which the warrants can be called.
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Such securities include stock options issued to employees and convertible bonds.

In securities, common stock that other securities issued by the same corporation are based upon. This stock has to be delivered when convertible bonds or preferred stocks are converted into common shares, ...

[Harvey] Automated Bond System (ABS) Processes orders in all listed nonconvertible bonds and suggests matches for possible execution.

A security that can be converted into common stock at the option of the security holder, including convertible bonds and convertible preferred stock.
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The number of shares increases when the company offers new stock to the public to raise cash; or when employees exercise their stock options; or when holders of convertible bonds convert their bonds to stock.

Yield to warrant call
Applies mainly to convertible securities. Effective yield of usable or synthetic convertible bonds determined against the first date at which the warrants can be called.

SBF FCI Index
An index based on a selection of convertible bonds with the highest market capitalization. Calculated twice daily.

Convertible Security
One security which is convertible into another. It is generally used with convertible preferred stock and convertible bonds. There is a specific rate at which the security can be converted.

In regards to convertible bonds, parity is the market value of shares of common stock into which the convertible can be converted. It is calculated by multiplying the stock price by the conversion ratio.

Convertible Bonds and Debentures may also be issued by corporations or government bodies. Convertible Notes are attractive to some investors in that they may display certain properties of both shares and fixed interest securities.

Examples include companies that have issued stock options and warrants that entitle their holders to buy additional shares of common stock from the company, and convertible bonds and preferred stocks that are exchangeable for common shares.

Conversion Price The price paid for a common stock that is obtained by converting either convertible bonds or preferred convertible stock.

See also: Convertible Bond, Banks, Expense, Bills, Funding