AI Boom Drives Record $147 Billion Convertible Bond Issuance
Investors are accepting near-zero coupon convertible bonds to gain AI exposure, pushing global issuance to a record $147 billion this year.
Global convertible bond issuance reached a record $147 billion this year, marking a 50% increase over the same period last year. This surge is driven by investors seeking exposure to the artificial intelligence boom, who are increasingly accepting instruments with near-zero coupons. This shift reduces traditional income protections and pushes the market toward equity-like risk levels not seen since 2021.
Nebius Group NV led recent activity by raising $4.5 billion through notes with coupons between 0% and 0.5%. Other major issuers capitalizing on this investor demand include CoreWeave Inc. and Lenovo Group Ltd.
Market reactions to the trend are divided. Some portfolio managers warn that current enthusiasm may overwhelm valuation discipline and mirror the risks of the 2021 bubble. Conversely, Joe Wysocki of Calamos Investments argues that today's issuers possess stronger fundamental momentum in revenue and profitability than those in previous cycles.
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