Demystifying Convertible Bonds for Equity and Credit Investors
By ICR Capital
Convertible bonds offer investors a hybrid security with pros and cons that can be difficult to assess without a baseline understanding of how they work. During this session, panelists Raj Imteaz of ICR Capital and Greg Rodgers of Latham & Watkins provided a crash course on convertible securities to buy-side investors and sell-side analysts. This session helped participants walk away with a stronger understanding of convertible securities and a better appreciation of the balance sheets and income statements of the companies they cover.
Topics discussed included:
- Overview of convertibles as an asset class
- Advantages and complexities of convertible bonds
- Using call spreads to mitigate future dilution
- GAAP and Non-GAAP accounting treatments
- Provisional call process, anti-dilution adjustments, settlement methods, and change of control treatment
- Overview of delta hedging strategy and impact on stock price
