medium · Debt Capital Markets bond-instruments-structures
What is the 'Bond Floor' in the context of a convertible bond, and why is it a critical analytical measure?
- The lowest possible credit rating the issuer can have before the bonds are automatically redeemed.
- The value of the instrument if it were a straight bond without the conversion option.
- The minimum price at which the issuer is legally required to convert the debt into equity.
- The total value of the conversion option itself, often referred to as 'Equity Parity.'
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