This excerpt is taken from an article titled "Caywood Looks for Convertibles," which appeared in the January 13, 1992, issue of BondWeek, p
7:
Caywood Christian Capital Management will invest new money in its $400 million high-yield portfolio in "busted convertibles," double- and triple-B rated convertible bonds of companies. . . ., said James Caywood, CEO. Caywood likes these convertibles as they trade at discounts and are unlikely to be called, he said.
What is a busted convertible?
If the price of the stock is low, so that the straight value is considerably higher than the conversion value, the bond will trade much like a straight bond. The convertible bond in such instances is referred to as a busted convertible or a bond equivalent.
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