Convertible Bonds In Türkiye: Opportunity Or Risk?

The increasing financing needs of tech start-ups, as well as other companies in Türkiye, create a search for alternative sources besides the bank loans or angel investors' investments. Debt instruments, more specifically convertible bonds, increasingly become a more attractive financing method since they allow the issuer to obtain cash up front for the shares to be issued in the future. The bondholder can either receive the nominal value and the interest of the bond or obtain a certain number of shares of the issuer by using the right to convert the bond. Accordingly, the hybrid characteristic of convertible bonds combines debt and equity securities features.

Convertible bonds are defined among the capital market instruments and regulated under the Communiqué on Debt Instruments (VII-128.8) (the Communique). However, both public and private joint stock companies may issue such bonds through different procedures.