U.S. issuance of convertible bonds in May hit a record high of $20.7 billion, according to Bank of America data, as companies struggling with the impact of the coronavirus pandemic ventured into the one-time niche market seeking cheaper and easier ways to borrow cash.
The convert market has also been a refuge for equity investors, said Joe Wysocki, who manages the long-only convertible fund at Calamos Investments.
Convertible debt is a hybrid security, offering a regular fixed payout like a bond, while giving bondholders the right to trade their debt for equity if shares rise over a certain price. Banks began pitching convertible deals early the pandemic, after plummeting stock values ground equity issuance to a halt. Since then the product has become the biggest source of fee growth for equity bankers, according to Refinitiv data. Convertibles have made up 34% of U.S. equity deals so far this year, up from 19% last year. The deals were seen as a solution for companies who needed cash but did not want to sell shares at lower valuations, bank sources said.
Desperation for cash, however, has led issuers to make some concessions. Conversion premiums - the amount the conversion price exceeds the current share price - have been falling, according to Wysocki.
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Having high blood pressure may make coronavirus more dangerousHigh blood pressure, a common disease affecting about 45% of Americans, is sometimes called the 'silent killer' because it can lead to early death even without symptoms. High blood pressure is blood pressure greater than 120/80. In fact, the most common underlying condition in hospitalized
Read more »
The Best Games of May 2020The best games of May include a poignant visual novel about acceptance, a photography game set in a police state, and a game about a shark.
Read more »
Having high blood pressure may make coronavirus more dangerousHigh blood pressure, a common disease affecting about 45% of Americans, is sometimes called the 'silent killer' because it can lead to early death even without symptoms.
Read more »
Scientists to choirs: Group singing can spread the coronavirus, despite what CDC may sayScientists studying tiny exhaled particles that could transmit the coronavirus say a Centers for Disease Control and Prevention decision to drop warnings against choral singing is dangerous, risking more 'super spreading events' such as a Washington state choir practice linked to two deaths.
Read more »
Antifa: Trained by terrorist PKK in Syria, may end up outlawed in the USPresident Donald Trump goes after Antifa as domestic protests turn violent but his administration didn’t act when its activists were training with terrorists in Syria.
Read more »
Why Val Demings May Be the Best Running Mate for Joe Biden Right NowPicking an African-America woman to be his running mate may not just be a politically expedient move by Joe Biden. After the events of the past week, it may just be the right thing to do.
Read more »