Michael Terry

Convertible Bonds Are an Interesting Speculation

Therefore, we prefer to be higher in the capital structure until more of the smoke clears. Convertibles are a bit higher than equities, although generally below traditional bonds, and certainly lower in the national capital structure than Treasuries and municipals.

Actually, unless you are talking about convertible preferreds, convertible bonds are parri to "traditional bonds" as they are senior unsecured debt. Converts are trading at discounts to the bond floors currently, essentially paying you to take an equity option. A 5-10% discount to bond floors in converts is a steal.