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Unformatted text preview: rsion of associated convertibles. CHAPTER 16 FOCUS ON PRACTICE Convertibles Speed Down
Financing Highway Once used mostly by non-investment-grade, high-tech companies,
convertible financings reached
record volume in 2001 as highquality companies issued convertible bonds. Finance executives
were attracted to convertibles by
their generally lower interest rates
than on nonconvertible debt and
by the opportunity to issue future
equity at higher prices than the
markets currently offered.
“The debt markets are closed
now to a lot of companies, and
who wants to issue stock at prices
we have seen recently?” observed
George Chacko, assistant professor at the Harvard Graduate
School of Business. “Convertibles
offer the best opportunity a lot of
companies have to raise capital in
these jittery markets.”
Information technology services company EDS, rated A1 by overhanging issue
A convertible security that
cannot be forced into conversion
by using the call feature. Hybrid and Derivative Securit...
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This document was uploaded on 01/19/2014.
- Fall '13