What does nonconvertible mean?
Nonconvertible means that something cannot be converted into another form or exchanged under specified terms. The expression is especially important in finance and economics. A nonconvertible currency cannot readily be exchanged for foreign currency, which can restrict imports, exports, investment, and international financial activity. A nonconvertible bond, loan, or preferred share cannot be converted into cash or exchanged for another security, although it may still repay its principal when it matures. The term developed from “convertible,” meaning exchangeable or capable of being changed into another form. Although it can be used in general contexts, it is much more common in discussions of monetary systems and securities. It is also less absolute than saying that something is literally impossible to exchange, since conversion may depend on legal terms, market conditions, government rules, or available financial arrangements.
Unable to be converted into another form or exchanged into cash, another security, or another currency under specified terms.
"Investors were reluctant to buy the nonconvertible preferred shares."
Chiefly used in financial and economic contexts, especially for currencies, bonds, loans, and preferred shares.
A financial security that cannot be converted into cash or exchanged for another security under the issuer's stated terms.
"The portfolio was dominated by high-yield nonconvertibles."
Usually plural in financial use, although the singular can be used when referring to a particular security.
The plural is standard when referring collectively to nonconvertible bonds, preferred shares, or other securities.
"The fund sold its nonconvertibles before interest rates rose."
Modern international finance was built around exchangeable currencies; many countries deliberately maintained nonconvertible systems until the latter half of the 20th century.
Reviewed by Deb Chak, Editor. AI-assisted content curated by RJS Tech Solutions LLP.
Where does nonconvertible come from?
The word was formed by combining the prefix non- with “convertible,” a term long used for currencies and financial instruments that could be exchanged for other forms or securities. Its elements ultimately derive from Latin: convertibilis was formed from convertere, meaning “to turn” or “to change.” The modern financial senses developed as states and companies issued instruments with explicitly defined conversion rights.
Related word forms
How nonconvertible is actually used
The word is most common in finance and economics. As a noun, it is often used in the plural to refer collectively to securities that cannot be converted into cash or another security. It is more technical than the general phrase “not exchangeable.”
Easily confused with nonconvertible
A convertible security or currency can be exchanged for cash, another security, or another currency under specified terms, whereas a nonconvertible one cannot.