In summary, convertibles are logical securities to use in at least two situations.
First, if a company would like to finance with straight debt but lenders are afraid
the funds will be invested in a manner that increases the firm’s risk profile, then convertibles
are a good choice. Second, if a company wants to issue stock but thinks such
a move would cause investors to interpret a stock offering as a signal of tough times
ahead, then again convertibles would be a good choice