Structured Yield Product Exchangeable For Stock (STRYPES)
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Definition: Structured Yield Product Exchangeable For Stock (STRYPES)
STRYPES is a type of convertible bond that pays coupons to the bond holder on quarterly basis and can also be converted into equity stocks of the issuer company at the time of maturity of the bond. These types of bond are generally issued by company that have high risk or those companies whose credit rating are low, so that they can also get access to capital from the market.
So, in order to attract investors towards their bond, these companies attach these kinds of various options with their bond in order to sweeten the offering. STRYPES was first introduced by Merill Lynch on various major exchanges of the world. These kinds of bonds also help to sell the stock of these companies to the investors.
The yield that is given on these types of bonds basically compensates for the low dividend that is given to the investors for investing in such types of financial instruments.