FCDs are debt instruments that can be converted into equity shares of the issuing company at the discretion of the holder. The holder does not have to convert the FCDs into equity shares and can hold the FCDs until they mature. FCDs typically have a longer maturity than other types of convertible securities and offer higher interest rates.
FCDs are often used by companies to raise capital without having to go through the process of issuing new equity. FCDs can be converted into equity at any time, so they offer flexibility to the issuing company. They also offer holders the potential to participate in the growth of the company if they choose to convert their FCDs into equity.
What is CCPS and CCD?
CCPS is an acronym for Convertible Collateralized Promissory Note. This type of note is a hybrid security that contains features of both a bond and a stock. The note is typically issued by a corporation in order to raise capital. The note is then converted into shares of the issuing company's stock at a predetermined price.
CCD is an acronym for Collateralized Convertible Debenture. This type of debenture is similar to a CCPS, but is typically issued by a financial institution rather than a corporation. The debenture is then converted into shares of the issuing company's stock at a predetermined price. What is convertible and non convertible debentures? Convertible debentures are bonds that can be converted into common stock at the bondholder's option. Non-convertible debentures are bonds that cannot be converted into stock. What is meant by fully convertible debentures and partly convertible debentures? Convertible debentures are bonds that can be converted into equity shares of the issuing company at the option of the holder after a specified period of time. Partly convertible debentures can be converted into equity shares only up to a certain percentage of the face value of the debenture, with the balance being repaid in cash at maturity.
What are the features of convertible debentures?
Convertible debentures are bonds that can be converted into equity at the discretion of the holder. The key features of convertible debentures are:
-They typically have a lower interest rate than non-convertible debentures, since they offer the potential for equity upside.
-They have a conversion price, which is the price per share at which the debenture can be converted. This price is typically set at a premium to the current share price.
-They have a conversion ratio, which is the number of shares that can be obtained for each debenture.
-They have a maturity date, at which point the debenture must be repaid in full.
-They may be redeemable at the option of the issuer, typically after a certain period of time.
-They may be callable at the option of the holder, typically after a certain period of time. What is FCD in investment? FCD stands for "Fully Convertible Debentures". As the name suggests, these are debentures that can be converted into equity shares at the discretion of the holder. In other words, FCDs give the holder the option to convert the debenture into a certain number of equity shares of the company at any time after a specified date.
The main advantage of FCDs is that they offer a higher return than regular debentures, since there is a potential for capital appreciation if the company's share price increases. However, there is also a greater risk involved, since the value of the FCD could drop if the share price falls.
Another key point to note is that FCDs are generally unsecured, which means that they are not backed by any assets of the company. This makes them a more speculative investment, but also means that they offer a higher return potential.