mandatory convertible

mandatory convertible definition - finance
A debt issue that is converted into equity within a certain time period, often three years. A mandatory convertible is an attractive alternative for companies that have too much debt. Ratings agencies typically count 80 cents out of each $1 in the mandatory convertible as equity, which helps protect the companyÂ’s debt rating. The debt can be ranked as equity because within three years the debt will be turned into equity.

Webster's New World Finance and Investment Dictionary Copyright © 2003 by Wiley Publishing, Inc., Indianapolis, Indiana.
Used by arrangement with John Wiley & Sons, Inc.

Comments
Improve this definition.
Do you have more to add? Share your linguistic knowledge or observation.
/Register to save your comments.