Convertible debt: What you need to know now

The market activity for convertible instruments—specifically convertible debt—has increased in recent months. However, the accounting can be complex. In this episode, John Bishop, PwC partner, joins Heather Horn to provide a refresher on the model and explain the guidance.Topics include:0:41 - Overview. We begin by discussing what makes convertible debt an attractive financing vehicle for issuers in the current environment.5:02 - The convertible debt instrument. Next, John discusses the economics of how a convertible debt instrument works.7:53 - Accounting. We discuss the accounting model and common concerns in accounting for these instruments.15:36 - Standard-setting developments. The FASB  is expected to release new guidance in upcoming weeks. John and Heather talk about what we expect to change and the areas that will be impacted.  19:51 - Final thoughts. We close by discussing  other types of transactions done in conjunction with the issuance of convertible debt and share key reminders.John Bishop is a partner in PwC's National office and the co-leader of the financial instruments team. In this role, he leads the group in advising the firm’s clients on a wide array of accounting and reporting matters. John specializes in the accounting for derivatives, financial instruments, financing transactions (e.g., securitizations and leasing), and M&A transactions. Heather Horn  is PwC’s National office thought leader, responsible for developing our communications strategy and conveying firm positions on accounting and financial reporting matters. She is the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series, as well as periodic webcasts for the power and utilities industry. With over 25 years of experience, Heather’s accounting and auditing expertise includes financial instruments and rate-regulated accounting.Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to [email protected].