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In finance, a convertible bond, convertible note, or convertible debt (or a convertible debenture if it has a maturity of greater than 10 years) is a type of bond that the holder can convert into a specified number of shares of common stock in the issuing company or cash of equal value.
A convertible security is a financial instrument whose holder has the right to convert it into another security of the same issuer. Most convertible securities are convertible bonds or preferred stocks that pay regular interest and can be converted into shares of the issuer's common stock.
Seniority can refer to either debt or preferred stock. Senior debt must be repaid before subordinated (or junior) debt is repaid. [1] Each security, either debt or equity, that a company issues has a specific seniority or ranking. Bonds that have the same seniority in a company's capital structure are described as being pari passu.
The notes, which carry a 0.625% interest rate, will be convertible into cash, shares of MicroStrategy's Class A common stock, or a combination of both, providing flexibility to noteholders.
The convertible senior notes will be convertible into shares of the Company's common stock, cash or a combination of shares of common stock and cash, at the Company's election.
This means that preferred stock is senior to common stock. But a company’s bonds are senior to preferred stock, so while preferred stock comes with less risk than common, it does carry more risk ...
A convertible bond is a bond (i.e. a loan to the issuer) that can be converted into common shares of the issuer. A convertible bond can be valued as a combination of a straight bond and an option to purchase the company's stock. [1]
SanDisk is booting up an attempt to raise some capital. The company announced that it intends to float an issue of convertible senior notes in a private offering to qualified institutional buyers.