Series 7: 2.9.4. Convertible Debentures

2.9.4. Convertible Debentures

Convertible bonds are bonds that can be converted into shares of preferred or (more often) common stock at a fixed conversion ratio, which is stipulated in the indenture. The convertible feature allows issuers to pay lower yields on debt and to raise equity capital without a public equity offering. It generally allows investors to choose when they want to convert, giving the investor an additional option and thus additional value.

Convertible debentures are usually offered as subordinated debt. Convertibl