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Exchangeable bond information


Exchangeable bond (or XB) is a type of hybrid security consisting of a straight bond and an embedded option to exchange the bond for the stock of a company other than the issuer (usually a subsidiary or company in which the issuer owns a stake) at some future date and under prescribed conditions.[1] An exchangeable bond is different from a convertible bond. A convertible bond gives the holder the option to convert bond into shares of the issuer.

The pricing of an exchangeable bond is similar to that of convertible bond,[2] splitting it in straight debt part and an embedded option part and valuing the two separately.

  1. ^ "Successful placement by KfW of exchangeable bonds due 2014, exchangeable into shares of Deutsche Post AG". 23 July 2009. Retrieved 2015-07-28.
  2. ^ Barber, Brad. "Exchangeable Debt" (PDF). ucdavis.edu. Retrieved 2015-07-28.

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