How does the 10% annual interest rate on the debentures compare to market rates for similar securities?

Rate comparison & market context

A 10 % annual coupon on a two‑year convertible debenture is roughly in line with, but slightly above, the prevailing yields for comparable high‑risk, junior‑capital securities in the Canadian market. Senior unsecured corporate bonds with investment‑grade credit (e.g., 5‑year Canada‑bond‑linked or BBB‑rated issuers) are trading in the 6‑8 % range, while junior‑secured or unsecured notes issued by TSX‑V or small‑cap technology firms typically demand 9‑12 % to compensate for higher default risk and limited liquidity. The convertible feature further narrows the premium; investors accept a lower “pure” yield because of the upside potential if Fort’s share price appreciates. In that sense, the 10 % coupon is competitive—high enough to attract fixed‑income‑oriented investors, yet not so high as to indicate a distressed issuer.

Trading implications

Because the coupon sits near the high‑end of the market range for comparable risk, the debentures should be attractive to income‑focused investors who also value upside conversion. The key driver will be the relative price of the underlying Fort equity. If Fort’s stock trades at a discount to the conversion price, the effective yield (including the conversion premium) will exceed 10 %, making the security more appealing; if the stock is near or above the conversion price, the effective yield drops, and the debenture will behave more like a high‑yield bond. Traders should monitor Fort’s near‑term price momentum (e.g., 50‑day moving average, RSI) and any upcoming catalysts (e.g., earnings, product launches) that could move the stock above the conversion threshold. A short‑to‑mid‑term strategy could involve buying the debenture (or its secondary‑market equivalents) while the spread to comparable high‑yield bonds remains wide, then flipping to equity if the conversion premium narrows as the equity price rises. Conversely, if market spreads tighten or Fort’s fundamentals deteriorate (e.g., cash‑burn, missed milestones), the 10 % coupon will become a relative “price‑premium” and the securities may become oversold, presenting a potential yield‑seeking entry point.