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Convertible markets navigate issuance divergence and risk

Heather Ng
As AI-driven issuance propels US convertible bonds to record highs, diverging market dynamics across Asia are forcing global investors to rethink their risk strategies.
Convertible markets navigate issuance divergence and risk
Key Points
  • The US market is booming with record AI-driven issuance, while Asia presents a mixed picture of expanding sector opportunities alongside a shrinking supply in China.
  • Investors face valuation premiums, high conversion premiums in Asia and the threat of market unwinding in the US due to hedge fund dominance and equity volatility drops.
  • Allocators are prioritising strong issuer quality, attractive coupons for downside protection and robust portfolio structuring over absolute liquidity.

The global convertible bond market in 2026 is defined by stark regional contrasts and a set of risks that investors must navigate carefully. While the United States continues to dominate issuance, Asia is carving out a more nuanced role, offering diversification but also presenting structural challenges that differ sharply from the US boom.

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