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Convertible Bonds Are Booming. Here's What You Need to Know. --


2021/03/24 19:29  Dow Jones Newswires

DJ Convertible Bonds Are Booming. Here's What You Need to Know. --

By Andrew Bary

Convertible bond issuance is booming as companies like Airbnb, Ford Motor, Spotify Technology, and Twitter take advantage of strong investor demand to get attractive financing.

U.S. convertibles issuance so far in March has totaled $21.6 billion, a record monthly total, and that doesn't include a coming $1 billion deal from ViacomCBS (ticker: VIAC). The March tally exceeds the $21.5 billion issued in May 2020, according to Michael Youngworth, the head of global convertibles strategy at Bank of America Securities.

For the year so far, issuance has totaled $37.3 billion. If that pace continues, this will be a record year for convertibles issuance. During 2020, $105.8 billion of new converts were issued, just shy of the record $106.4 billion in 2001.

More investors are attracted to the convertible market, thanks to its impressive showing last year, when it returned 46%. Now, the sector is broadening with many new issuers.

"It's a way to get equity exposure with principal protection; it's a great way to be in the market," says Tracy Maitland, the president and chief investment officer of Advent Capital Management, which runs $11 billion mostly in convertibles. It manages the Advent Convertible & Income (AVK) closed-end fund.

Maitland likes a recent convertible from Ford (F), saying that it amounts to an "option" on the company's recovery and electric vehicle initiatives with downside protection.

Many companies are issuing convertibles with interest rates of zero and at historically high conversion premiums of as much as 60%, which means it will take a sizable gain in the underlying stocks for investors to score on the new deals.

The market is not as appealing as it was when companies like Carnival (CCL) and Southwest Airlines (LUV) issued attractively priced converts in the wake of the pandemic a year ago.

The weighted average rate on new deals this year is 0.5%, with a 46% premium, against an average of 1.5% and a 35% premium in 2020, according to Bank of America Securities.

The $2 billion deals from Airbnb (ABNB) and Ford carried zero interest rates, with the Airbnb convert having a 60% premium. Issuance has accelerated recently with six deals that came to market Monday including JetBlue Airways (JBLU), Redfin (RDFN), and Tripadvisor (TRIP).

Convertibles returned 4.4% this year through Monday, based on the ICE BofA US Convertibles index after gaining about 46% in 2020. The largest convertibles exchange-traded fund, the SPDR Bloomberg Barclays Convertible Securities ETF (CWB) is up about 1%. The U.S. market now totals $345 billion.

Write to Andrew Bary at

(END) Dow Jones Newswires

March 24, 2021 07:29 ET (11:29 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.


安德鲁·巴里(Andrew Bary)著

随着Airbnb、福特汽车(Ford Motor)、Spotify Technology和Twitter等公司利用投资者强劲的需求获得有吸引力的融资,可转换债券的发行正在蓬勃发展。

3月份到目前为止,美国可转换债券发行总额达到216亿美元,创下月度纪录,这还不包括维亚康姆哥伦比亚广播公司(ViacomCBS)即将进行的10亿美元交易。美国银行证券(Bank Of America Securities)全球可转换债券策略主管迈克尔·杨沃斯(Michael Young Gworth)表示,3月份的数字超过了2020年5月发行的215亿美元。



Advent Capital Management总裁兼首席投资官特雷西·梅特兰(Tracy Maitland)表示:“这是一种在本金保护下获得股票敞口的方式;这是进入市场的一个很好的方式。”Advent Capital Management运营着110亿美元的资产,主要是可转换债券。它管理着Advent可转换收益(AVK)封闭式基金。



这个市场已经不像一年前狂欢节(Carnival)和西南航空(Southwest Airlines)等公司在疫情爆发后发行价格诱人的转换产品时那么有吸引力了。

根据美国银行证券(Bank Of America Securities)的数据,今年新交易的加权平均利率为0.5%,溢价46%,而2020年的平均利率为1.5%,溢价为35%。

Airbnb和福特价值20亿美元的交易是零利率的,Airbnb转换后的交易有60%的溢价。最近,包括捷蓝航空(JetBlue Airways)、Redfin和TripAdvisor在内的六笔交易于周一上市,股票发行速度加快。

根据洲际交易所美国可转换债券指数(ICE BofA US Convertible Index),可转换债券今年截至周一的回报率为4.4%,而2020年的涨幅约为46%。最大的可转换交易所交易基金(ETF)SPDR彭博巴克莱可转换证券ETF(CWB)上涨约1%。美国市场目前的总规模为3450亿美元。






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