Convertible corporate bonds have the dual attributes of stocks and bonds, and are "stocks with principal protection" for investors. Convertible corporate bonds have a strong market appeal to investors, mainly in the following three points:
1. Convertible corporate bonds give investors the lowest income right.
The biggest difference between convertible corporate bonds and stocks is that they have the characteristics of bonds. Even after losing the conversion significance, as a low-interest bond, there will still be a fixed interest income. At this time, investors as creditors can get fixed principal and interest income. If the conversion is realized, the income from selling ordinary shares or dividend income will be obtained.
2. The current income of convertible corporate bonds is higher than the dividend of common stock.
Investors can get regular interest income while holding convertible corporate bonds. Usually, the current income of convertible corporate bonds is higher than the dividend of common stock. If not, convertible corporate bonds will be converted into stocks soon.
3. Convertible corporate bonds have priority over stocks.
Convertible corporate bonds are inferior credit bonds, which have the same recourse as ordinary corporate bonds and long-term liabilities (bank loans) in repayment order, but rank behind ordinary corporate bonds and can be repaid in priority compared with convertible preferred stocks, preferred stocks and common stocks.
Convertible corporate bonds (hereinafter referred to as convertible bonds) are a kind of corporate bonds, which are divided into broad sense and narrow sense. In a narrow sense, convertible corporate bonds mean that bondholders have the right to convert their corporate bonds into corporate bonds that issue shares of the company according to agreed conditions. Convertible corporate bonds in a broad sense refer to corporate bonds that give bondholders the right to convert into other securities, and the conversion object is not limited to the shares of the issuing company.
Convertible corporate bond is a special corporate bond that can be converted into common stock at a specific time and under specific conditions. Convertible bonds have the characteristics of both bonds and stocks, and have the following three characteristics:
(1) credibility. Like other bonds, convertible bonds stipulate interest rates and maturities. Investors can choose to hold mature bonds and collect principal and interest.
(2) equity. Convertible bonds were pure bonds before the conversion, but after the conversion, the original bondholders changed from creditors to shareholders of the company, and they can participate in the business decision-making and dividend distribution of the enterprise.
(3) convertibility. Convertibility is an important symbol of convertible bonds, and bondholders can convert bonds into stocks according to agreed conditions. Converting shares is an option that investors enjoy but ordinary bonds do not. Convertible bonds are clearly stipulated at the time of issuance, and bondholders can convert bonds into common shares of the company at the price agreed at the time of issuance. If the bondholders do not want to convert shares, they can continue to hold the bonds until the repayment period expires to collect the principal and interest, or they can be sold and realized in the circulation market. Convertible bond is a special kind of corporate bond, which can be converted into common stock at a specific time and under specific conditions.