Sire Ns: Convertibles With A Tricky Shift

The word "siren" can evoke a wailing police car or a sweet-voiced temptress. Now, it's also an acronym for a newfangled type of bond: the Step-up Income Redeemable Equity Note. Invented by First Boston, SIRENs are intermediate-term, convertible bonds that have two coupons. They pay below-market interest for a few years, then "step up" to a higher rate until maturity. Investors can convert the bonds, whenever they want, into common stock at a price determined by the issuer.

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