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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. It is a hybrid security with debt- and equity-like ...
In addition, due to its debt nature, a contingent convertible bond constitutes a tax shield before conversion. Hence, as compared to common equity, the cost of capital and, consequently, the cost of maintaining a risk absorbing facility are lower. In case the trigger event occurs, conversion of debt into equity drives down company's leverage ...
Y Combinator released the Simple Agreement for Future Equity ("SAFE") investment instrument as an alternative to convertible debt in late 2013. [4] It was written by Carolynn Levy. This investment vehicle has since become popular in the U.S., Canada, [5] and Israel, due to its simplicity and low transaction costs.
Hybrid securities are a broad group of securities that combine the characteristics of the two broader groups of securities, debt and equity.. Hybrid securities pay a predictable (either fixed or floating) rate of return or dividend until a certain date, at which point the holder has a number of options, including converting the securities into the underlying share.
Convertible bonds are bonds that can be converted into shares of stock in the issuing company, usually at some pre-announced ratio. It is a hybrid security with debt- and equity-like features. It can be used by investors to obtain the upside of equity-like returns while protecting the downside with regular bond-like coupons.
Debt consolidation. Your home equity can help you consolidate and pay off high-interest debt without a personal loan. If you can get a lower interest rate than you’re paying on your separate ...
Benefits of tapping your home equity to pay off debt. Taking out a home equity loan can free up room in your budget to pay down high-interest debts, among other benefits that include:
Convertible bond; Reverse convertible bond; Convertible preferred stock; Asset-linked bond: Although a bond with an asset warrant is a type of convertible security, regular warrants are not. A regular warrant provides an equity option, where the holder may opt to buy newly issued shares at a determined exercise price and date.