Convertible Bond

A bond that can be converted into a predetermined amount of the company's equity at certain times during its life, usually at the discretion of the bondholder.

Convertibles are sometimes called "CVs".

Issuing convertible bonds is one way for a company to minimize negative investor interpretation of its corporate actions. For example, if an already public company chooses to issue stock, the market usually interprets this as a sign that the company's share price is somewhat overvalued. To avoid this negative impression, the company may choose to issue convertible bonds, which bondholders will likely convert to equity anyway should the company continue to do well.

From the investor's perspective, a convertible bond has a value-added component built into it; it is essentially a bond with a stock option hidden inside. Thus, it tends to offer a lower rate of return in exchange for the value of the option to trade the bond into stock.


Investment dictionary. . 2012.

Look at other dictionaries:

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

  • Convertible bond — Financial markets Public market Exchange Securities Bond market Fixed income Corporate bond Government bond Municipal bond …   Wikipedia

  • 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… …   Financial and business terms

  • 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 — Fin a bond that the owner can convert into another asset, especially common stock …   The ultimate business dictionary

  • 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

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