Question

4. Why do companies find the issuance of convertible bonds to be an attractive form of financing? Explain the rationale for this statement.

Answer 1

Since Issuance of convertible bonds are an easy source of financing and can provide the companies with an immediate amount of cash with an nominal rate of interest in comparison to what is being charged on other long term debt financing otions.

It also provide company an option to get the bonds converted into common shares and thereby reducing their chances of paying up the bond in near future thereby maintaining their liquidity and enhanicng the working capital management.