Why do companies find the issuance of convertible bonds to be an attractive form of financing?

Answer: Convertible debt securities are attractive as a form of financing because the issuing company obtains
needed financing at a lower interest rate. Bondholders usually ascribe value to the conversion feature. Due to
the call provision that is frequently found on convertible bonds, the corporation can push the bondholders into
conversion if the stock price is rising. It is, therefore, possible that convertible bonds may never require a cash
outflow to reduce the bond principal.

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