The fluctuating maturities of convertible bonds
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Author
Verwijmeren, P; Yang, ADate
2020-06-01Source Title
Journal of Corporate FinancePublisher
ElsevierUniversity of Melbourne Author/s
Verwijmeren, PatrickAffiliation
FinanceMetadata
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Journal ArticleCitations
Verwijmeren, P. & Yang, A. (2020). The fluctuating maturities of convertible bonds. Journal of Corporate Finance, 62, https://doi.org/10.1016/j.jcorpfin.2020.101576.Access Status
This item is embargoed and will be available on 2022-06-01Abstract
The maturities of newly issued convertible bonds vary substantially over time. Firm-specific determinants of maturity from the straight debt literature are relevant for convertible bonds. However, the growth of the convertible arbitrage industry and the role of convertible arbitrage hedge funds have changed the importance of firm characteristics in the convertible bond market. Recently issued convertible bonds come with particularly short maturities that serve as substitutes for call provisions. This substitution implies that backdoor-equity and sequential-financing rationales for issuing callable convertible bonds are also applicable for non-callable convertibles with shorter maturities.
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