top of page



Bonds are debentures, so the bond can also be referred to as a loan. Bonds have a fixed interest rate. So you already know when you close the deal what profit you can expect. So there are no or very few price fluctuations.

The situation is different with reverse convertible bonds. They are characterized by a higher annual interest payment than conventional bonds. To do this, the investor must accept the way in which the issuer repays the nominal amount. This can be done either in euros or in shares of the underlying asset. Reverse convertibles are exciting when the share price rises, falls slightly or moves sideways. Only then is the higher interest payment an advantage.


Bonds and reverse convertibles are traded on the stock exchange just like stocks. The corporate bonds are issued directly by the relevant companies. In the case of reverse convertible bonds, these are exclusively credit institutions.

  • Corporate bond: the issuer is the company itself.

  • Reverse Convertible Bonds: The credit institution is always the issuer.


Reverse convertible bonds always refer to the company's shares (finds the name as the underlying). In addition, the issuers (banks) of the reverse convertible bonds have the option to repay the reverse convertible bonds to the investor in cash (nominal amount) or in shares on the due date. The risk with traditional bonds is that the issuer could default. In addition, there is a risk of bankruptcy for the credit institution with reverse convertible bonds.

  Difference to corporate bonds:

  • In the case of reverse convertible bonds, the issuer has a choice (cash or share repayment)

  • Higher risk than with traditional bonds (risk of bankruptcy of the credit institution and the company)


Reverse convertible bonds are given as a percentage in the same way as corporate bonds and refer to a fixed nominal amount. In most cases, this amount is 1,000 euros.

Here is an example:

If the price of the reverse convertible is quoted at 96 percent, the investor or buyer only has to pay 96 percent of the nominal amount for the bond. In this case, that would be 960 euros. Accordingly, the return can also be increased.


  • Reverse convertible bonds do not acquire shares in the respective company.

  • No direct debenture (loan) to the company (the bank is the issuer).

  • With reverse convertibles, you can become a shareholder of the respective company at the end of the term (in this case, the issuer delivers the shares on the due date).

  • No entitlement to dividends or participation in the case of share price increases. Instead, however, there is a fixed interest rate (which is higher than the traditional bonds).

  • The risk of loss is lower with reverse convertible bonds than with stocks (the price development is insignificant, the interest amount is paid). If prices fall, the losses on reverse convertible bonds are lower than those of direct investments (stocks).

Those who want to eat well buy stocks; those who want to sleep well buy bonds. (André Kostolany)


bottom of page