Debenture Add Cross Out Option For Free

Companies issue convertible debentures as fixed-rate loans, paying the bondholder fixed interest payments on a regular schedule. Bondholders have the option of holding the bond until maturity?at which point they receive the return of their principal?but, holders may also convert the debentures into stock.

Convertible bonds are corporate bonds that can be exchanged for common stock in the issuing company. Companies issue convertible bonds to lower the coupon rate on debt and to delay dilution. A bond's conversion ratio determines how many shares an investor will get for it.

Advantages of Debt Financing in Convertible Bonds Regardless of how profitable the company is, convertible bondholders receive only a fixed, limited income until conversion. This is an advantage for the company because more of the operating income is available for common stockholders.

A compulsory convertible debenture is a bond that investors need to convert into stock after the expiry of its maturity period. It helps a company by enabling them to repay their debt without spending cash and benefits investors in the face of fixed interest and later ownership of the company share.

A convertible debenture is a kind of long-term debt which can be transformed into stock after a specific period of time. A convertible debenture is usually an unsecured bond or a loan as in there is no primary collateral interlinked to the debt.

For companies, OCDs provide an avenue to raise funds without diluting ownership significantly. They can generate interest income during the debenture tenure and convert the debentures into equity shares when advantageous market conditions or strategic opportunities arise.

A debenture can be nonconvertible or convertible. A nonconvertible debenture will not be converted into equity. It therefore commands a higher interest rate than convertible debentures. A convertible debenture can be converted into common shares of the issuing company after a predetermined time.