Convertible Debt and Hybrid Securities are notoriously hard to value and near impossible to include purposively within asset allocation and portfolio construction methodologies. As equity-linked financing alternatives now abound, their variants too preclude a one size fits all approach. For example the Bond Hedge & Warrant (“BH&W”), a structural enhancement to a convertible bond to effectively raise the conversion premium, adds complexity. Hybrid capital securities have evolved to now refer to a range of non-dilutive fixed income instruments that incorporate equity-like features. The accounting treatment for such securities too differs from those applicable to traditional in the United States.
I highlight these and other considerations in our latest research piece. In this presentation I address five key areas of interest ; (i) What are Convertibles and Why are They Issued?; (ii) Overview of Convertible Debt; (iii) Overview of High-Equity Content Convertibles; (iv) Accounting Review; (iv) Investors and Market Dynamics