1. Newsroom
  2. Convertibles sparking investors’ interest
Menu
UBP dans la presse 25.07.2018

Convertibles sparking investors’ interest

Convertibles sparking investors’ interest

Finanz und Wirtschaft (18.07.2018) - With the entry into an advanced phase of the economic cycle, companies have been looking at convertible bonds with fresh eyes as a valid alternative to traditional debt instruments to finance their growth.


The figures speak for themselves: according to BofA Merrill Lynch, global convertible primary issuance totalled USD 58 billion in H1 2018, equivalent to more than 77% of the entire volume issued in the convertible space in 2017.

The US tech sector has been particularly active, accounting for close to a quarter of the year-to-date global convertible primary activity, with a flurry of new deals from both repeat and first-time issuers. This dynamism gives investors opportunities for diversification – a key asset to ride out markets’ ups and downs – and to actively manage their investments in an industry that is benefitting from supportive secular trends.

Looking forward, this strong convertible issuance trend looks here to stay, given that equity markets are still elevated and interest rates are on a upward path, especially in the US, where recent changes to the tax code constitute another driver to primary activity in the convertible space.

In this context, the lower coupons traditionally offered by convertibles in exchange for the conversion right are a key argument in favour of the asset class for companies with financing needs.

Furthermore, from an investor’s perspective, we believe that the current late-market cycle environment favours convertible bonds. Their convex nature, combined with their intrinsic relative lower sensitivity to interest rates, makes them strategic assets to navigate today’s challenging markets. Many benefits can currently be accessed under fairly attractive terms, as shown by implied volatility levels in the universe. Across convertible markets, IV currently stand below, or, in the US, in line with, their mid-term average level at a time when, in contrast, the pricing of listed options has significantly increased on the back of higher volatility.

UBP Convertible Bond range offering

CLAVERIE BUKTE Scarlett.jpg

Scarlett Claverie-Bulté
Investment Specialist - Convertibles

 


A lire également

UBP dans la presse 29.09.2022

UBP: la banque suisse et ses intégrations scandinaves

Paperjam (27.09) - Suite aux acquisitions des équipes et de la clientèle de Banque Carnegie Luxembourg et de Danske Bank International, l’Union Bancaire Privée a renforcé sa position au Luxembourg pour une clientèle transfrontalière. Patrick Casters, CEO de l’UBP (Europe) SA, et Johnny Bisgaard, deputy CEO, décrivent ce «hub européen».

UBP dans la presse 26.09.2022

The Rise of Fiscal Dominance

Hong Kong Economic Journal (09.2022) - The global economy is now increasingly dominated by fiscal policy, creating a hugely different investment landscape.

UBP dans la presse 22.09.2022

Rate rise expectations are hammering gold

Finanz und Wirtschaft (17.09.2022) - In August, gold prices started off with a rise, following the publication of lower US inflation data than expected.