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Convertible bonds

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Definition of Convertible bonds

Convertible Bonds Image 1

Convertible bonds

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



Related Terms:

Bond value

With respect to convertible bonds, the value the security would have if it were not convertible
apart from the conversion option.


Convertible exchangeable preferred stock

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.


Convertible security

A security that can be converted into common stock at the option of the security holder,
including convertible bonds and convertible preferred stock.


Deferred equity

A common term for convertible bonds because of their equity component and the
expectation that the bond will ultimately be converted into shares of common stock.


Bonds payable

Amounts owed by the company that have been formalized by a legal document called a bond.



Brady bonds

bonds issued by emerging countries under a debt reduction plan.


Busted convertible

Related: Fixed-income equivalent.


Convertible Bonds Image 2

Canada Savings Bonds

A bond issued each year by the federal government. These bonds can be cashed in at any time for their full face value.


Collateral trust bonds

A bond in which the issuer (often a holding company) grants investors a lien on
stocks, notes, bonds, or other financial asset as security. Compare mortgage bond.


convertible bond

Bond that the holder may exchange for a specified number of shares.


Convertible Debenture

Are debt instruments that are convertible into common or preferred shares, take secondary or no security against assets, have flexible terms of repayment and charge fixed or floating interest rates.


Convertible eurobond

A eurobond that can be converted into another asset, often through exercise of
attached warrants.


Convertible preferred stock

Preferred stock that can be converted into common stock at the option of the holder.


Convertible price

The contractually specified price per share at which a convertible security can be
converted into shares of common stock.


Convertibles

Securities (generally bonds or preferred shares) that are exchangeable at the option of the holder for common shares of the issuing firm.


Corporate bonds

Debt obligations issued by corporations.


Cushion bonds

High-coupon bonds that sell at only at a moderate premium because they are callable at a
price below that at which a comparable non-callable bond would sell. Cushion bonds offer considerable
downside protection in a falling market.


Dollar bonds

Municipal revenue bonds for which quotes are given in dollar prices. Not to be confused with
"U.S. Dollar" bonds, a common term of reference in the Eurobond market.



Eurodollar bonds

Eurobonds denominated in U.S.dollars.


Euroyen bonds

Eurobonds denominated in Japanese yen.


General obligation bonds

Municipal securities secured by the issuer's pledge of its full faith, credit, and
taxing power.


Global bonds

bonds that are designed so as to qualify for immediate trading in any domestic capital market
and in the Euromarket.


International bonds

A collective term that refers to global bonds, Eurobonds, and foreign bonds.


Investment grade bonds

A bond that is assigned a rating in the top four categories by commercial credit
rating companies. For example, S&P classifies investment grade bonds as BBB or higher, and Moodys'
classifies investment grade bonds as Ba or higher. Related: High-yield bond.


Long bonds

bonds with a long current maturity. The "long bond" is the 30-year U.S. government bond.


Long bonds

bonds with a long current maturity. The "long bond" is the 30-year U.S. government bond.


Serial bonds

Corporate bonds arranged so that specified principal amounts become due on specified dates.
Related: term bonds.


Short bonds

bonds with short current maturities.



Term bonds

Often referred to as bullet-maturity bonds or simply bullet bonds, bonds whose principal is
payable at maturity. Related: serial bonds


Treasury bonds

Debt obligations of the U.S. Treasury that have maturities of 10 years or more.


Yankee bonds

Foreign bonds denominated in US$ issued in the United States by foreign banks and
corporations. These bonds are usually registered with the SEC. For example, bonds issued by originators with
roots in Japan are called Samurai bonds.



 

 

 

 

 

 

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