How do convertible bonds work?
Companies wanting to raise capital can issue a product called convertible bonds. In this article we discuss how these products work. Why issue convertible bonds? Companies which are in the initial growth phase may find it hard to obtain financing from lenders due to a poor credit rating. They may issue convertible bonds to investors to raise funds for expansion or a new project. How do convertible bonds work? Convertible bond holders receive regular interest payments with a pre-agreed coupon …