Convertible Gilts Explained

Another non straightforward bond product out there (like anything there are many varieties) is what is known in the financial world as a convertible gilt.

This refers to one whereby you can have the option added to convert at a future date the bond into one that has a longer dated issue.

Or of course the bond can simply be allowed to mature as required and to then simply receive the standard money at the time of redemption.

Why would someone be interested in a convertible gilt? Well the option is usually to do with flexibility to have the option to assess the market and state of play at a future date and work out whether there would be benefit in having longer dated issues at the time, like with most things information is power so this allows you to make another decision at a more informed time.

Bond terms explained: Covenant
How spot rates relate to forward rates
Relationship between bond price and yield
Syndicated Loans Explained
Forward Rates Explained

Convertible Gilts Explained

Related Articles