Foreign exchange market
Real estate market
Financial market participants
Banks and Banking
In finance, a convertible note (or, if it has a
maturity of greater than 10 years, a "convert-
ible debenture") is a type of bond that can be
converted into shares of stock in the issuing
company or cash of equal value, at some pre-
announced ratio. It is a hybrid security with
debt- and equity-like features. Although it
typically has a low coupon rate, the holder is
compensated with the ability to convert the
bond to common stock at an agreed upon
price and thereby participate in further
growth in the company’s equity value.
From the issuer’s perspective, the key be-
nefit of raising money by selling convertible
bonds is a reduced cash interest payment.
However, in exchange for the benefit of re-
duced interest payments, the value of share-
holder’s equity is reduced due to the stock di-
lution expected when bondholders convert
their bonds into new shares.
The convertible bond markets in the Un-
ited States and Japan are of primary global
importance. These two domestic markets are
the largest in terms of market capitalisation.
Other domestic convertible bond markets are
often illiquid, and pricing is frequently non-
• USA: It is a highly liquid market compared
to other domestic markets. Domestic
investors have tended to be most active
within US convertibles
• Japan: In Japan, the convertible bond
market is relatively more regulated than
other markets. It consists of a large
number of small issuers.
• Europe: Convertible bonds have bec