Convertible bonds are bonds that can be converted into the company's equity at the discretion of the bondholder.
Convertible bonds are attractive for issuers for several reasons:
It is an additional source of financing which is welcome in current market environment.
The product allows for a smaller coupon than for a straight bond due to the option component embedded in the product.
It targets a specific investor base and allows for stakeholders’ diversification.
When converted, they are redeemed in new shares, allowing a capital increase at a premium versus the share price prevailing at launch of the CB.
Execution is fast and efficient, with very limited communication.
The structure is very flexible and can be tailored to meet issuers’ needs: issuer call to force conversion during the life of the CB.
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