First of all let us under stand the meaning of convertible bond. It gives holder the right for “converting” or exchanging  the par amount for bond in exchange od common shares

Issuing the  convertible bonds will helps  corporation to secure equity financing in the delayed manner, as it is taking time for bondholders to trade with their bonds for the common stock. All this process will delays common stock & earnings per share dilution.

Corporations may sell bonds at the lower coupon rate rather then standard bond because of stock purchase option.More the conversion  feature is worth, lower the yield it would need for selling a  bond. Because the convertible bondholders will only receive fixed income, relatively small, more operating income is available for common stockholders until such bonds convert with stocks.

Convertible bonds has coupon payment & are legally debt securities, which rank prior withl equity securities in the case of default situation

Exchange feature of  convertible bond gives right to holder for converting the par amount of the bondin exchange of  common shares at particular  price

Issuers company  sell convertible bonds with intension to provide a higher current yield for investors &  equity capital upon the  conversion. The Investors generally buy convertible bonds for  gaining a higher current yield & less downside, as if  convertible bond  should trade to its bond value in case of  steep drop in  common share price.