Convertible and Covered Bonds

The lesson teaches about convertible and covered bonds. 

Convertible Bonds have the following features.

1. Bonds with embedded options with equity/ debt/currency conversion factor

2. The floor value is a straight fixed bond with a conversion into predetermined equity shares of the issuer of the bond

3. Bonds with equity warrants with an embedded call option

Covered Bonds are one of the largest sectors in the European Bond Market. In this type of bonds,  the pool of assets is dynamic and remains with the bank. The European Bond Market size used in the lesson (refer to the materials section- Source: ECBC; S&P Global.) 

Loans backed by a cover pool of assets:      

Residential mortgage loans

Commercial mortgage loan

Public sector loans