Chapter 16 focus on practice convertibles speed down

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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.

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