What are convertible debentures

1. Convertible debentures are longterm debt instruments issued by a company that can be converted into equity shares of the company on a future date.

2. They can be fully, partially or optionally convertible.

3. They pay a lower coupon rate (interest) than pure debt instruments.


4. A debenture holder is a creditor or lender of the company.

5. Investors benefit from interest payment and have the option to convert the loan into equity to participate in the growth of the company.

(Content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)