Convertible bonds - The road to recovery
After a challenging start to 2005, the outlook is brightening for the convertible bond market. We asked analysts and investors for their views on this asset class
David King
Putnam Investors
Stock and bond markets were choppy in the first quarter. Moreover the convertibles market reacted negatively when rating agencies cited GM for its deteriorating credit. The spread between high-yield and high-grade corporate bonds of comparable maturities widened significantly. Weak stock performance and widening credit spreads were detrimental to convertible bonds in the first half of the year.
Although convertibles experienced a correction, we did not
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