The world’s largest convertible bond manager has unveiled a “synthetic convertibles” exchange traded fund to spread the concept to companies that are so cash-rich they do not need to issue real bonds.
Last year saw a boom in convertibles — a type of bond that can be swapped for shares if a company’s stock price hits a pre-agreed level — with issuance jumping 77 per cent to $48bn, according to LSEG.
The rebound, driven by rising interest rates as convertibles pay a lower coupon than mainstream bonds, has pulled in more established companies to augment the younger technology and biotech groups that have traditionally dominated issuance.
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