Convertible bonds are issued by the target company, allowing investors to acquire and become bondholders. Initially, these bonds function similarly to traditional bonds, with a defined tenure and an interest rate that entitles bondholders to receive regular interest payments from the issuing company.
The unique feature of convertible bonds is their ability to be converted into shares at some point during the bond's lifetime. The terms and conditions of the convertible bond outline the specific scenarios and conditions under which conversion can occur.
You can find details to this investing type here.