Fixed IncomeJun 16 2016

Managers sound alarm on convertible bond issuance

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Managers sound alarm on convertible bond issuance

Mr Basile was more positive about the outlook. He said the asset class had been through many periods of low issuance in its history. However, he did note the current struggle was in a protracted period of low interest rates.

He said the nature of the bond, which can shift from being bond-like to equity-like depending on markets, meant the investible universe via the secondary market increased with volatility in either space.

However, Mr Perrin said a boost in the primary market was essential. He said an anaemic primary market would leave bonds too sensitive to bond and equity markets.

Mr Perrin added increased primary issuance would provide fairer valuations, as newer bonds would correct scarcity value and add diversification.