Convertible Debt

Equity participation through debt-like instruments.

Convertible debentures are hybrid securities that combine the characteristics of both common stocks and non-convertible fixed income bonds. Consequently, they must be evaluated based on both their stock-like and bond-like characteristics. Generally, convertible debentures are subordinated debt with a fixed coupon and an option to convert into a fixed number of shares of the underlying equity.

Convertible debentures go through several phases, including the credit phase, hybrid phase, equity phase, and forced-conversion phase. The overall attractiveness of these instruments depends greatly on several factors including price, which phase on the conversion cycle they are currently in, as well as their specific credit rating.

The Burak Hannon Brojde Group has access to an extensive database of research on convertible debentures that is updated on a quarterly basis. We can help you understand these securities and the role they can play in your investment portfolio.