top of page
Convertible issuance 2022 2023.png

Convertible bonds in a nutshell:

  • Term financing (normally 5 years)

  • Low fixed rate coupons vs. other forms of debt

  • Conversion premium means far less dilution

  • Unsecured, and with no covenants

  • No credit rating required

  • Limited documentation 

  • Timeline, start to finish, as little as 4 weeks

Convertible bonds are back in vogue ! 

 

Issuance of convertible bonds — debt securities with an option to be converted into stock — has jumped in 2023 as corporates take advantage of them to lower their borrowing costs.

​

For example, US companies alone have issued more than $40 billion of convertibles across 63 deals, based on data from Dealogic. That’s up from $29 billion and 54 transactions in all of 2022.

 

Why? Largely because the Federal Reserve has ratcheted up interest rates, thus prompting companies to seek ways to reduce interest expense.

 

Convertible notes lower a company’s cash borrowing costs compared to non-convertible bonds by giving investors exposure to the company’s equity in the future. 

​

bottom of page