Convertible vs Non Convertible Debentures

Convertible vs Non Convertible Debentures

Subject :Economy

Context: On 23 August, Adani Group companies said they had acquired the stake in NDTV indirectly by buying VCPL, which owned convertible debentures (warrants that provide for the conversion of debt to equity) in RRPR, that in turn owns 29.18% of NDTV

Convertible vs Non Convertible Debentures:

Convertible debentures are debentures that can be converted into equity of the company and have a low rate of interest. The value of maturity of convertible debentures is dependent on the stock price of the company at that time, which means a high stock price will give higher returns while a low stock price will give low returns.

Non-convertible debentures cannot be converted into equity shares of the company and offer a high rate of interest. The value of non-convertible debentures is fixed and hence they will receive fixed returns on maturity.