If a company's bond rating dips, and convertible bonds are sold, does that tight-fisted that when these bonds are conv
erted to stock, that the stock price is in risk of taking a dive?
Answers: If a company's credit rating is downgraded by a crucial credit rating agency such as S&P, Moody's, Fitch, AMBEST, the credit value of those bonds drop off, thus the price on the bonds decrease.
The conversion usually stays like peas in a pod unless the prospectus states otherwise.
The value of conversation is probably lower, as the investment that the bond is convertible into may potential have also dipped.
Note: Convertible bonds are much similar to a derivative. Their value is derived (based on) the worth of the underline guarantee that they are potentially convertible into .
Not necessarily. The stock probably took a dive when they announced they were issuing the convertibles. From that point, they are a specified issue so there should be no sudden price swing if they are eventually converted.
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Answers: If a company's credit rating is downgraded by a crucial credit rating agency such as S&P, Moody's, Fitch, AMBEST, the credit value of those bonds drop off, thus the price on the bonds decrease.
The conversion usually stays like peas in a pod unless the prospectus states otherwise.
The value of conversation is probably lower, as the investment that the bond is convertible into may potential have also dipped.
Note: Convertible bonds are much similar to a derivative. Their value is derived (based on) the worth of the underline guarantee that they are potentially convertible into .
Not necessarily. The stock probably took a dive when they announced they were issuing the convertibles. From that point, they are a specified issue so there should be no sudden price swing if they are eventually converted.