Busted Convertible Security
A convertible security that is trading well below its conversion value. The result is that the security is valued as regular debt because there is very little chance that it will ever reach the convertible price before maturity. Investopedia Says:
This is a convertible that is now a non-convertible because the convertible price is 50% or more above the current share price. Some investors have found success in trading busted convertibles. While the possibility of converting into stock is usually remote, busted converts usually trade at prices and yields very close to other nonconvertible debt (so you don't compromise returns). Meanwhile, if by chance the stock rebounds, the bond could become extremely valuable. Related Terms:
Common Stock
Contingent Convertible
Conversion Price
Convertible Bond Convertibles
Convertible Preferred Stock
Irredeemable Convertible Unsecured Loan Stock - ICULS
Mandatory Convertible
Structured Yield Product Exchangeable For Stock - STRYPES |