Conversion option

A conversion option refers to whether or not the bond has a feature that allows it to be converted into another security, typically common stock, at a predetermined price and within a specified period.

Non-convertible

Non-convertible bonds do not have the option to be converted into equity shares of the issuer or any other entity.

These bonds offer fixed interest payments to bondholders until maturity, providing a predictable income stream.

Non-convertible bonds are typically considered less risky than convertible or exchangeable bonds as they do not expose investors to fluctuations in the stock market.

Convertible

Convertible bonds give bondholders the option to convert their bonds into a predetermined number of shares of the issuer's common stock.

This conversion feature provides investors with the potential for capital appreciation if the issuer's stock price rises above the conversion price.

Convertible bonds typically offer lower interest rates compared to non-convertible bonds due to the added benefit of potential equity participation.

Exchangeable

Exchangeable bonds are similar to convertible bonds but differ in that they can be exchanged for shares of a different company, usually a subsidiary or a related entity of the issuer.

The exchange feature allows bondholders to benefit from the performance of the underlying shares of the different company.

Exchangeable bonds are often issued by companies looking to divest a stake in a subsidiary while maintaining control.