Convertibles - End of the affair

Back in 2003, convertibles were the darling of the credit market, but in recent months the attraction has cooled. Uncertainty over interest rates is one reason for the drop in issuance, but other factors are in play, as Saskia Scholtes discovers

As the financial markets digest the impact of the Federal Reserve’s first interest rate hike in the last four years, investors in convertible bonds are eyeing both primary market issuance and secondary market performance with concern.

Convertibles are hybrid securities sold with a coupon and an option to convert into the issuer’s equity once the stock price reaches a certain threshold. These