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What are ‘Convertible bonds‘?

These are bonds where the holder may convert his redemption proceeds into the equity of the issuing company. Known as "equity convertibles", they can offer a combination of yield and growth for investors. These instruments may see their price driven higher by a rise in the company's equity. Risk, however, is generally higher.

In some cases, bonds may be issued with the option to convert into other bonds. These are a rather different kettle of fish and should not be confused with the "equity convertibles" above.

Please note convertible bonds are complex in nature and as such investors wishing to buy them must complete a sophisticated products suitability questionnaire. This questionnaire is designed to ensure the investors is aware of the risks on the investment before purchasing.

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