Convertible debentures are long-term debentures issued by companies to raise funds.
A debenture holder is a lender to the company and thus enjoys regular interest payments.
Convertible debentures offer a lower interest when compared to pure debt instruments; however such debentures can be exchanged for stocks after a predetermined period of time.
For businesses, these debentures are considered to be among the quickest and most feasible ways of raising funds.
For investors, convertible debentures offer an investment avenue that has characteristics of both debt and equity as they receive a fixed-rate of interest while also having the option of converting their loan to equity.
No comments:
Post a Comment