A CB investor can convert into shares and gain from a rise in the share price, and, if the share price falls, can still receive the face value by holding the CB to maturity. Because of the right to convert into shares, the coupon is generally lower than on a straight bond. If the issuer becomes unable to pay, the investor may not receive the face value.
Convertible bond
- Japanese
- 転換社債
- Also known as
- CB
- Last reviewed
- September 25, 2026
This is a draft, shown for review before publication.
A convertible bond (CB), formally called a convertible bond with share options in Japan, is a corporate bond that can be converted into shares of the issuing company at a conversion price set in advance. When the share options are exercised, the full amount of the bond is redeemed in place of a cash payment for the shares, so the investor hands over the bond and receives shares.