In updating the report on Alcanna, I noticed it has a convertible denture that pays 4.7% and is trading right around par value and maturing in 15 months. The symbol is CLIQ.DB
This might be of interest as a fixed income investment. It is also tempting to consider this as an alternative to holding cash or a guaranteed cash equivalent. But time and again, investors learn that there simply is no substitute for cash. Only cash and absolutely guaranteed cash equivalents can absolutely be relied upon not to drop in value during various market panics such as we had early this year. In addition, convertible debentures could sink well under par value and in rare cases go to zero due to problems specific to a given company. So definitely not a substitute for cash.
But for those who have enough allocated to fixed income to allow for diversification then perhaps convertible dentures like this are worth considering as part of a fixed income allocation.
I would consider investing in convertible debentures at par or below where the company seems reasonably strong.
I don’t like the idea of buying them above par on the hopes that the stock price will rise above the conversion price. In that case I would rather just buy the stock.
The Alcanna one has a conversion price of $14.60 which is far higher than the $5.47 stock price. Therefore this convertible debenture should be bought for the 4.7% interest and not on any hope of conversion.
See also my comment about the Aecon convertible debenture that I posted November 1. One correction, I said in that post that I did not recall ever owning a convertible debenture. I had forgotten that the Melcor REIT debenture that I mentioned on March 25 and bought around then is a convertible. That debenture and probably many others were trading at steep discounts in March. I bought it for the probably capital gain, not the interest. They would rarely be available at such steep discounts unless the company was quite risky or in a general market panic.