Credit · Core
Convertible Bond
A convertible is a bond plus an embedded call on the issuer’s stock — credit with equity convexity, or equity with a coupon, depending on the delta.
Definition
Holder can convert into shares at a strike (conversion price). Price is bond floor plus option. Delta rises as the stock rips (equity-like) and falls as credit spreads blow (busted convert). Dilution sits in the share count.
Why it matters
Issuance is a cheap(er) coupon for growth names. The hedge book (delta, credit) is a flow in the stock.
Case
A busted convert in 2022 traded on credit; the same name in 2021 traded on the warrant. Same CUSIP, different Greek.
How to read it
Parity, premium, effective yield, and hedge delta. Then the credit floor — converts do default.
No query has been run yet. Which is tragically normal for most knowledge systems, but we are trying to evolve past decorative databases.