3

Convertible Bonds and Mandatory Convertible Bonds

This chapter examines the major characteristics of convertible bonds and mandatory convertible bonds. It covers the terminology, structures and price behavior of these instruments, as well as issuer and investor motivations. Also in this chapter, contingent convertibles – FRESHES, CASHES and ECNs – are covered in detail. Several real case studies are included: a convertible bond issued by the German corporate Infineon, a mandatory convertible bond issued by UBS, a FRESH issued by Fortis Bank, a CASHES issued by Unicredit and an ECN issued by Lloyds.