Mandatory Convertible
Definition of 'Mandatory Convertible'A type of convertible bond that has a required conversion or redemption feature. Either on or before a contractual conversion date, the holder must convert the mandatory convertible into the underlying common stock.These securities provide investors with higher yields to compensate holders for the mandatory conversion structure. |
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Investopedia explains 'Mandatory Convertible'These are often used when a traditional equity issuance would otherwise place severe market pressure on the underlying stock. |
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