Mandatory Convertible Bonds as an Efficient Method of Issuing Capital

Huerga, Ángel y Rodríguez Monroy, Carlos (2017). Mandatory Convertible Bonds as an Efficient Method of Issuing Capital. En: "11th International Conference on Industrial Engineering and Operations Management XXI Congreso de Ingeniería de Organización", 5th to 6th July 2017, Valencia, España. pp. 1-8.

Descripción

Título: Mandatory Convertible Bonds as an Efficient Method of Issuing Capital
Autor/es:
  • Huerga, Ángel
  • Rodríguez Monroy, Carlos
Tipo de Documento: Ponencia en Congreso o Jornada (Artículo)
Título del Evento: 11th International Conference on Industrial Engineering and Operations Management XXI Congreso de Ingeniería de Organización
Fechas del Evento: 5th to 6th July 2017
Lugar del Evento: Valencia, España
Título del Libro: 11th International Conference on Industrial Engineering and Operations Management XXI Congreso de Ingeniería de Organización
Fecha: 2017
Materias:
Palabras Clave Informales: Mandatory Convertible Note; Capital; Dividend Protection; Callspread; cost of capital
Escuela: E.T.S.I. Industriales (UPM)
Departamento: Ingeniería de Organización, Administración de Empresas y Estadística
Licencias Creative Commons: Reconocimiento - Sin obra derivada - No comercial

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Resumen

Mandatory Convertibles Notes (MCNs) mean only a small fraction of all the securities issued by corporate or financial institutions, however, they represent nearly a 30% in volume of the convertible securities issued every year. MCNs share characteristics of equity and debt securities but rating agencies assign them a high equity component and are commonly treated as equity by accounting standards. Despite the high facial coupon that MCNs seem to pay, a deeper analysis shows that the cost of MCN can be lower than the cost of issuing hybrid or subordinated debt and in some cases similar to the cost of issuing senior debt. Mandatory convertibles were profusely issued by financial institutions amid the global crisis as a means to increase capital and could be considered as a predecesor of some types of AT1 and Contingent Convertible. The academic literature about Mandatory Convertibles is scarce and we consider necessary to shed some light on a type of security that can be very useful for the real economy Keywords:

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Depositado el: 01 Ago 2018 18:22
Ultima Modificación: 01 Ago 2018 18:22
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