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Convertible Debentures are those debentures which are convertible in equity shares after some specified time generally mentioned at the time of issue of such debentures.
Partially convertible debentures (PCDs) involve redeeming a fraction of the value of the security for cash and converting the other part into equity. A fully convertible debenture (FCD) involves a full conversion of the debt security into equity at the issuer's notice.
Fully Convertible Debenture: These are debentures in which the whole value of debentures can be converted into equity shares of the company. Partly Convertible Debenture: In this kind of debentures, only a part of the debentures will be eligible for conversion into equity shares.
What are the main differences between NCDs and CCDs? NCDs provide fixed returns without an option for conversion into equity, while CCDs offer potential equity conversion at a predetermined time, combining debt and equity features.
Secured Debentures: Secured debentures are that kind of debentures where a charge is being established on the properties or assets of the enterprise for the purpose of any payment. The charge might be either floating or fixed. ... Unsecured Debentures: They do not have a particular charge on the assets of the enterprise.
Companies issue convertible debentures as fixed-rate loans, paying the bondholder fixed interest payments on a regular schedule. Bondholders have the option of holding the bond until maturity?at which point they receive the return of their principal?but, holders may also convert the debentures into stock.
The following are the types of convertible debentures. Fully Convertible Debenture. ... Partially Convertible Debenture. ... Conversion Price. ... Conversion Ratio. ... Quantum of Conversion. ... Convertible Value. ... Time of Conversion. ... Coupon.
Description: The investor of such debentures has a right to convert the debt into equities of the issuing company at a price which is normally decided at the time of the issue.