What Is an Equity Willpower Phrase (ECN)?
An equity determination phrase is a kind of important convertible debt issued via a monetary establishment that can be exchanged for stock at maturity. The phrase is repayable from the sale of stock via its issuer.
It is essentially a kind of corporate debt that incorporates restrictions on the borrower that mandate how the money to repay the debt will also be raised.
Key Takeaways
- An equity determination phrase is a kind of important convertible bond issued via a monetary establishment or other lending status quo.
- The phrase may also be exchanged for stock at maturity.
- Essentially, an equity determination phrase is a corporation bond.
Working out the Equity Willpower Phrase (ECN)
The equity determination phrase is a kind of corporate debt. It is redeemed during the sale or issue of securities at a long run date during the monetary establishment or lending status quo that issues it.
An equity determination phrase differs from an equity contract phrase in that the investor is not required to shop for the securities so to redeem the phrase. The equity determination phrase may also be redeemed at a later time all the way through the sale of each now not extraordinary or most well liked stock.
In the US, the Federal Reserve Monetary establishment gadgets a maximum maturity of 12 years and requires that the issuing company fund one-third of the equity each and every 4 years.
