Exchangeable bond: Difference between revisions
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imported>Doug Williamson (Expand definition.) |
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== See also == | == See also == | ||
* [[An introduction to equity capital]] | |||
* [[Bond]] | * [[Bond]] | ||
* [[Convertible bonds]] | * [[Convertible bonds]] | ||
Latest revision as of 15:33, 16 November 2022
(XB).
A straight bond with an embedded option to exchange the bond for the stock of a company other than the issuer (usually a subsidiary or company in which the issuer owns a stake) at some future date and under prescribed conditions.
This right is an option in favour of the holder / investor.
In return for this additional valuable right, the investor is generally willing to accept a lower rate of interest on the debt.
This saves interest for the issuer / borrower, at the cost of writing the option.
