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http://hdl.handle.net/11718/12776| Title: | Case for convertible securities in Indian financial markets |
| Authors: | Jerath, Deepti |
| Keywords: | Finance;Financial institution - India;Corporations - India - Finance;Capital market;Capital market - India;Indian capital market |
| Issue Date: | 5-Jan-2002 |
| Publisher: | Indian Institute of Management, Ahmedabad |
| Series/Report no.: | SP;899 |
| Description: | Executive Summary Convertible bonds have been used world over as an instrument of financing for companies, and as an investment vehicle for investors. These securities display a number of unique and interesting characteristics that need to be understood before any meaningful discussion of their relevance in different markets can he analyzed. In the paper, which is divided in three parts, I make a case for use of convertibles in India and argue that the present state of the equity and debt markets would necessitate such a use. (Surely, convertibles have been in use in India since the ‘5Os, but their use has been very limited, and the structures have mostly been elementary, with mandatory conversion a feature of almost all the issues.) Part I deals with the “Fundamentals of Convertibles”, which is basically an introduction to what these instruments are, how they are valued, certain peculiarities, who are the players in the convertible market, and also.what are the different investment strategies they use. Part II goes on to Audy convertibles that are more complex. It is necessary that we have an understanding of these to realize what the scope of the instrument is and how it can be structured to serve various needs of the issuer and investor. Part III, finally, deals with the issue of use of convertibles in India. It covers the Indian IPO market of last year, which shows an extremely dismal picture of primary markets. Then, the benefits of convertibles to both issuer and investor are explained, and their relevance in this market situation. In addition, I discuss briefly about the nature of companies that issue them, and the scope of usage. Finally, I Warn about some of the dangers that might be expected from the use of convertibles. Here the historical usage of the so called “death spirals” has been used to illustrate the hazards involved. |
| URI: | http://hdl.handle.net/11718/12776 |
| Appears in Collections: | Student Projects |
Files in This Item:
| File | Description | Size | Format | |
|---|---|---|---|---|
| SP 2002_899.pdf Restricted Access | 1.88 MB | Adobe PDF | View/Open Request a copy |
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