Issue of Convertible Notes

Convertible bonds are typically issued by companies that have high expectations for growth and less-than-stellar credit ratings. The companies get access to money for expansion at a lower cost than they would have to pay for conventional bonds. Investors, in turn, get the flexibility of turning their convertible bonds into cash or stock shares.

A Start-up Company with little current revenue and rapid growth potential might be an ideal candidate for issuing a convertible bond.