Why does convertible debt carry a lower coupon than straight debt?

Convertible debt carries a lower coupon than straight debt because it offers investors the option to convert their debt into equity at a predetermined price, which provides potential upside if the company's stock performs well. This conversion feature adds value to the bond, allowing issuers to pay lower interest rates compared to straight debt, which lacks such conversion benefits. Consequently, investors are willing to accept a lower yield in exchange for the opportunity to participate in the company's equity growth.