Cart (0)
VIDEOTaking the Top Off Convertibles
Free resource allows you to unlock these bonds.
 |
|
For instance, if you google “Theravance convertible bond,” one of the top results is the following:
"Theravance, Inc. (THRX) today announced that it closed the sale of its previously announced underwritten public offering of $172.5 million aggregate principal amount of unsecured 3% convertible subordinated notes due 2015, which includes the full exercise of the underwriters' over-allotment option for $22.5 million aggregate principal amount of notes.
The notes are convertible into shares of the Company's common stock at an initial conversion rate of 38.6548 shares per $1,000 principal amount of the notes, subject to adjustment in certain circumstances, which represents an initial conversion price of approximately $25.87 per share."
The key information you get here are the bond’s coupon (3%), maturity (2015, though the exact date would be nice) and conversion ratio (38.6548 shares per $1,000 face amount).
Once you have the conversion ratio, you can quickly calculate the bond’s conversion value -the amount you would get if you converted the bond right now and sold the stock you received at its current market price. (You would never do this in practice, but it’s important to know how conversion value is obtained.)
Theravance closed last night at $12.71, so the bond’s conversion value is simply $12.71 times 38.6548, or $491.30 per $1000 face. Since bonds are typically quoted as a percentage, you would say conversion value (also known as “parity”) is 49.13.
Ok, so you've learned the basic information about the convertible. There’s still one huge problem - one that, until a few minutes ago, I thought might be insoluble without a ridiculously expensive subscription. But I just hit a little bit of paydirt, so read on.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
