NISM Series XV : Research Analyst Certification Exam Notes
Page 6 Of 62
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Convertible debentures are debt instruments paying periodic coupon/interest and they can be converted into equity shares of the company at a future date
Fully convertible debentures (FCD) - where the entire face value of the debenture is converted into equity shares
Partly convertible debentures (PCD) - where a portion of the debenture is converted into equity and the non-convertible portion continues to remain as debentures, earns interest income and gets repaid on redemption
Optionally convertible debentures (OCDs) are convertible into equity shares at the discretion of the debenture holders, who may choose to convert them into equity, or continue to hold the instrument as debt depending on their desire and the terms of conversion.
The issuer specifies the details of the conversion at the time of making the issue and that will include Dates for conversion, Ratio of conversion, Price of conversion and the price discounts.
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