Mandatory Convertible Bonds as an Efficient Method of Issuing Capital

Huerga, Ángel and Rodríguez Monroy, Carlos (2017). Mandatory Convertible Bonds as an Efficient Method of Issuing Capital. In: "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.

Description

Title: Mandatory Convertible Bonds as an Efficient Method of Issuing Capital
Author/s:
  • Huerga, Ángel
  • Rodríguez Monroy, Carlos
Item Type: Presentation at Congress or Conference (Article)
Event Title: 11th International Conference on Industrial Engineering and Operations Management XXI Congreso de Ingeniería de Organización
Event Dates: 5th to 6th July 2017
Event Location: Valencia, España
Title of Book: 11th International Conference on Industrial Engineering and Operations Management XXI Congreso de Ingeniería de Organización
Date: 2017
Subjects:
Freetext Keywords: Mandatory Convertible Note; Capital; Dividend Protection; Callspread; cost of capital
Faculty: E.T.S.I. Industriales (UPM)
Department: Ingeniería de Organización, Administración de Empresas y Estadística
Creative Commons Licenses: Recognition - No derivative works - Non commercial

Full text

[img]
Preview
PDF - Requires a PDF viewer, such as GSview, Xpdf or Adobe Acrobat Reader
Download (223kB) | Preview

Abstract

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:

More information

Item ID: 51025
DC Identifier: http://oa.upm.es/51025/
OAI Identifier: oai:oa.upm.es:51025
Deposited by: Memoria Investigacion
Deposited on: 01 Aug 2018 18:22
Last Modified: 01 Aug 2018 18:22
  • Logo InvestigaM (UPM)
  • Logo GEOUP4
  • Logo Open Access
  • Open Access
  • Logo Sherpa/Romeo
    Check whether the anglo-saxon journal in which you have published an article allows you to also publish it under open access.
  • Logo Dulcinea
    Check whether the spanish journal in which you have published an article allows you to also publish it under open access.
  • Logo de Recolecta
  • Logo del Observatorio I+D+i UPM
  • Logo de OpenCourseWare UPM