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NEWSLETTER 2011
108
World
The convertible bond market in the USA and Japan are of primary
global importance.
• USA: convertible bonds are highly important in the US market.
Domestic investors have tended to be most active within US
convertibles.
• Japan: In Japan, the convertible bond market is more regulated
than other financial markets.
• Europe: Convertible bonds have lately become increasingly
important. Compared to other globalmarkets, European convertible
bonds tend to be of high quality and have high standards.
• Canada: Most of the Canadian convertible bond market consists
of unsecured sub-investment grade bonds with high yields and has
the issuer's risk of default.
Communiqué Serial II, No 22
The maturity date of the convertible bonds is fixed with the minimum
of one year term. The conversion period of convertible bonds begins after
one year from the date of issue and usually ends on the maturity.
In the cases of a public offering of convertible bonds, the shares of
the issuer must be listed and traded in the stock exchange or any other
organized security market.
The exercise of conversion right is subject to the extend of the right
and benefits of the issuing company and current shareholders of the issuer.
The convertible bonds, in whole or in part, may be converted into
shares in accordance with the redemption plan, demand of the issuer or
demand of the bond holder.
From the issuer’s aspect the convertible bonds can also be “callable”
(may have the call option). This means that the issuing company may
give the bondholders the right to convert such bonds into shares.
This option is actually deemed as an investor risk.
The shares that represent the increased capital that will be converted
into convertible bonds shall be allocated to the bond holders before any