convertible bond


convertible bond
A bond that includes a provision allowing the holder to exchange the bond for a quantity of the issuer's common stock at some fixed exchange ratio. An otherwise normal corporate bond that has a fixed maturity date that pays coupon interest and repays principal at maturity. It is issued with an option to exchange the bond for a fixed number of shares of common stock at the option of the bondholder, thereby allowing the convertible bond to share in the growth potential of the underlying common stock. It is senior to stock within the corporate equity structure, although probably junior to other corporate debt. Convertible bonds are often callable. American Banker Glossary
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General debt obligation of a corporation that can be exchanged for a set number of common shares of the issuing ( issue) corporation at a prestated conversion price. Bloomberg Financial Dictionary
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A bond that can be converted into other securities. Euroclear Clearing and Settlement glossary
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A bond which confers on the holder the right to exchange the bonds for other securities of the issuing company at a predetermined price and at, or during, determinable dates. Exchange Handbook Glossary
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These bonds can be converted into a specified number of shares of the issuing company at a pre-determined price. London Stock Exchange Glossary

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convertible bond convertible bond bond

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   A bond that is convertible into a fixed number of an issuing company's stock at a pre-set conversion price. This price is usually at a premium over the current or average price, but purchasers of the convertible bond hope that the price of the underlying stock will rise. Because of the prospect of possible capital gains on the shares, the bond can carry a lower coupon, or nominal rate of interest. Convertible bonds may often be used for arbritrage by traders who can make money by spotting differences between the valuation of the bond and the underlying shares.
   ► See also Arbitrage, Bond, Coupon.

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convertible bond UK US noun [C]
FINANCE, STOCK MARKET a bond that can be exchanged for ordinary shares: »

The group may have to seek additional future funding by issuing convertible bonds.


Financial and business terms. 2012.

Look at other dictionaries:

  • convertible bond — see bond 2 Merriam Webster’s Dictionary of Law. Merriam Webster. 1996. convertible bond …   Law dictionary

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  • Convertible bond — Eine Wandelanleihe (auch Wandelschuldverschreibung, Wandelobligation engl. convertible bond) ist ein von einer Anteilsgesellschaft ausgegebenes und in der Regel mit einem Nominalzins ausgestattetes Verzinsliches Wertpapier, das dem Inhaber das… …   Deutsch Wikipedia

  • convertible bond — noun a bond that can be converted to other securities under certain conditions • Hypernyms: ↑bond, ↑bond certificate * * * a bond that can be exchanged for a fixed number of shares of the common stock of the issuing company at the holder s option …   Useful english dictionary

  • convertible bond — a bond that can be exchanged for a fixed number of shares of the common stock of the issuing company at the holder s option. * * * …   Universalium

  • convertible bond — A bond that can be converted into other securities …   Euroclear glossary

  • Convertible Bond — in Großbritannien und USA seit langem gebräuchliche industrielle ⇡ Wandelschuldverschreibung, deren Inhaber das Recht haben, sie von einem bestimmten Termin ab unter bestimmten Wandlungsbedingungen in ⇡ Aktien der Gesellschaft umzutauschen. In… …   Lexikon der Economics

  • convertible bond — promissory note which can be converted into shares by its possessor …   English contemporary dictionary

  • Convertible Bond Arbitrage — An arbitrage strategy that aims to capitalize on mispricing between a convertible bond and its underlying stock. The strategy is generally market neutral; in other words, the arbitrageur seeks to generate consistent returns with minimal… …   Investment dictionary