Edmond de Rothschild: Seizing opportunities on Europe’s convertible bond market

What is driving the European convertible market?

In recent months, the European market has been seeing rapid growth. Issuance in 2014 had already topped EUR 9bn1. This positive trend has gradually helped it reduce the gap with the US market which currently represents USD 198bn or half of the global convertible market. European convertibles account for around USD 123bn. 

“Europe offers a variety of opportunities but it is essential to stick with a selective approach”

Enthusiasm for European convertibles is due to investors looking to gradually increase equity risk exposure and companies searching for cheaper funding. New issuance is spread across all sectors and capitalisation sizes.

Disintermediation, in particular, has helped make the market accessible to new issuers, notably small and mid cap companies. This means the market is now getting stronger and more diversified. A good example is Italy’s Maire Tecnimont which two months ago used the convertible market to find funding and reduce its risk premium. It was a small issue which went off very well.

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