The recent weakness in Asian share prices has made it less attractive for companies to sell convertible bonds but year-to-date issuance is still substantially higher than in 2013 and up to $1.5 billion of new issuance is waiting to get done, according to a leading convertible bond banker.
For now, many Asian issuers are taking advantage of continued low interest rates to raise cash through straight bond sales instead of issuing convertible bonds, though the equity-linked window remains open for some US-listed names, such as Chinese tutoring company TAL Education, which trades on the New York Stock Exchange and sold a $200 million convertible bond late last week.
Conditions were ideal for convertible bond issuers earlier in the year, when rising share prices and interest rates made it an easy choice for companies with volatile stocks and a decent credit profile. As a result, more than a dozen Asian issuers tapped the convertible bond market during the first four months of the year, raising more than $4 billion — twice as much as had been raised at this point last year, according to Bloomberg data.