The fast evolving convertible bond market (TT Dec03 p18-19)

The convertible bond (CB) markets are nothing new to UK companies. The benefits of CB issuance are well-known: low interest costs and equity issued at a premium. However, there was a time when plain vanilla convertible bonds were a company’s only equity-linked fund-raising choice, and fears of dilution and loss of shareholder value dominated UK plc’s perception of CBs. Over the past three years the UK convertible market has evolved tremendously in the issuer’s favour, both in terms of attractive pricing and flexibility of structure.