Convertible bonds are a hybrid financial instrument that combines features of both debt and equity. Like traditional bonds, they offer fixed interest payments and a maturity date. However, they also provide the bondholder with the option to convert the bond into a specified number of shares of the issuing company’s common stock.

Key Advantages of Convertible Bonds for Small and Mid-Cap Companies

Reduced Regulatory Burden: Compared to traditional bond issuances, convertible bonds often involve less stringent regulatory requirements, making them a more accessible financing option for smaller companies.

Lower Issuance Costs: By avoiding underwriting fees and other associated expenses, companies can significantly reduce the cost of raising capital.

Attractive to Investors: Convertible bonds can be appealing to investors as they offer the potential for capital appreciation if the company’s stock price rises.

Flexibility: Companies can tailor the terms of the convertible bonds to meet their specific needs, such as the conversion price, interest rate, and maturity date.

Why Small and Mid-Cap Companies Should Consider Convertible Bonds

Small and mid-cap companies in Thailand, in particular, may find convertible bonds to be a valuable financing tool. These companies often face challenges in accessing traditional debt and equity markets. Convertible bonds offer a flexible and cost-effective way to raise capital while preserving equity ownership.

By understanding the benefits and drawbacks of convertible bonds, small and mid-cap companies can make informed decisions about their capital structure and future growth.