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Are Convertible Bonds same as Convertible Notes ?
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hybridvestor
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03-Jun-2007 23:34
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Hi teeth53 & rogue_trader, Thanks for your help and informaton ... I will need to study more about bonds and its operation before I can continue to ask more questions or make any comment ... thanks once again !! :) . |
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teeth53
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03-Jun-2007 14:58
Yells: "don't learn through life, learn to grow with life " |
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 annnotefinaltranchewproceeds.pdf
Hope it help why is non-interest bearing and yet those BBs still want to convert......all about steady income return to yield |
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rogue_trader
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03-Jun-2007 14:11
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hybridvestor, normally convertible notes are issued by investment banks like morgan stanley, lehman and so on.. and if i nt wrong, they normally priced the exercise price at a premium, like say 10%, of the closing price on a certain date prior to the launch of the notes or using the average closing pricing computed within a range of period.. what i posting was "plain-vanilla" type of bonds/notes. if you are "painting" the picture of the best of both worlds, this is not highly unlikely bt with convertible features, normally they will oso come with call feature.. meaning the issuer had the "right" to call back/redeem your notes within a stipulated time frame.. anyway, if u come across any types of convertible bonds/notes, read thru everything and u might see if there the best of both worlds or nt.. dun forget, investment banks oso got people (employees, shareholders and so on) to feed one, they must oso earn $$ one. if you have any questions, you can continue to ask teeth53 for more info since he had oreadi "given" u a "life scenario".. alternatively, you can come into the thread "fellowship of the shares" and look for me or the other masters over there.. hope u understand what i saying abt the bondie things.. |
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teeth53
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03-Jun-2007 09:48
Yells: "don't learn through life, learn to grow with life " |
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Quote From ChaiserTan, "currently, it is in the process of issuing a $50 million convertible bonds. Four months after the completion of the issue, the bonds can be converted at a 10 per cent discount to the then-traded price of the shares. So the lower the share price, the more shares the bond holders will get. However, there is a minimum conversion price". I personnal noted such coverted notes been done by BBs in CEnerasve, prices converted previously, for eg: last year, 2006 at about 0.13cts, now trading at 185-19cts, a 50% premium in equities profit, giving the sure thing that is moving in CEnersave, year ending trading prices will be worth more then it current trading price. |
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teeth53
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03-Jun-2007 09:29
Yells: "don't learn through life, learn to grow with life " |
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But for a Non-Interest bearing Convertible bond (Notes), it is not paying any interest at all (I deduce that from its description), why are people still buying them ? Converting them into shares at their price that they are comfortable within certain munbers of years from within the written bond agreement, but at certain price, for eg: CEnersave may trade at 18cts today, later maybe reading at 20cts and if bond holding think CEnersave is seen to be rising steady-ly. it will be better for in this case, for Credit Sussie who is hoding $35mil bond been issuing to them to covert at an early stage rether then later stage, but there also an agreement written into it to convert bond w/o interest and within a set price nor below say 18cts or say 195 cts. All this will be decide by BBs, so CEnersave trading will eventually price steady-ly upward and with news of electricity px increases and world leaders eyeing to GREEN this world plus selling carbon credit and so on...Hummmm.......hope it help U to understand better what is going on and why CEnersave price don spike up, co's if price shoot up, bond holders  will have to more....hope it help. |
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hybridvestor
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03-Jun-2007 00:33
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Hi rogue_trader, Very concise explanation !! Thanks ... :) So as a Non-Convertible Notes buyer, he has the best of both worlds, meaning, if the underlying stock price trades higher than when the stock price of the Notes are issued initially, he can then convert it into the respective equities, thus enjoying the difference (the side effect is to dilute the float); or if the stock trades lower than the inital stock price, he'll still stick with the notes/bond contract, accepting the difference in the bond purchase price and the maturing notes/bond par value ? Pardon me please as I'm very new to bond/notes and its mechanism. Thanks again !! :) . |
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rogue_trader
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03-Jun-2007 00:10
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hybridvestor, i dunno whether will my below posts will clarify your doubts or not, bt here it goes.. i had came across 2 types of "classic" bonds before, one got interest payment (coupons), the other one no interest payment. so now if you are talking about the non-interest one, why people buy got 2 main reasons: very highly "volatile", and it actually got "interest" one e.g "non-interest" bond par value $1000 maturing in 5 years, and one might be paying $850 now.. so the "effective" interest per year is ($1000 - $850 / 5) = $30.. | |||
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hybridvestor
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02-Jun-2007 23:57
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Hi johnbrendan, Thanks for your reply .... :D I am actually wondering if they are the same beast under different names .... from the various replies I have gotten, I gather they should refer to the same thing .... May I ask what is the attractiveness of a stock that issued Non-Interest bearing Convertible Notes ? I understand most Bonds/Notes buyers buy these instruments because they give a periodic return in terms of interest ... but for a Non-Interest bearing Convertible Notes, it is not paying any interest at all (I deduce that from its description), why are people still buying them ? Hope yourself and anyone who is knowledgeable in bonds/notes can assist me ... thanks again .... :D . |
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johnbrendan
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02-Jun-2007 22:40
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Hi Hybridvestor, If I am not wrong, a Singapore govt treasury bond is one that is for 5 years and above whereas a treasury note is one that lasts 1-3 years. Similarly, the same applies to convertible bonds and notes... Basically, tenure of bonds are generally longer than notes... |
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hybridvestor
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02-Jun-2007 18:20
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Are they the same ? Thanks .... :D . |
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