DEFINITION of 'Sweetener'

A special feature or benefit added to a debt instrument (such as bonds) or a preferred stock offering to increase its value in the markets. Two popular forms of sweeteners are warrants and rights, which allow the holder to either convert securities into stock at a later date or purchase shares at below-market prices.


Sweeteners are especially useful for companies that are having a hard time attracting investors or raising capital at affordable prices. A given company may want to conduct a standard debt offering, but if there isn't enough investor appetite to sell all of the debt the sweetener can help attract enough investors to sell the entire issue. Sweeteners will always cost something extra to the company giving them away, but the exact cost may not be calculable until some date in the future.

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