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Remember mandatory convertible bonds? Bonds that automatically convert into shares acquired a dubious reputation when they were last issued in large numbers back in 2002. Yet they have staged a big comeback this year.
JPMorgan has just sold €1.6 billion of bonds that will be repaid in the shares of German insurer Allianz. UBS has sold €700 million of bonds that will be exchanged for shares in car maker DaimlerChrysler. And Fortis, the Dutch banking and insurance group, has sold $700 million of bonds that will be exchanged for shares in Assurant, a US insurer it used to own. That adds up to almost €3 billion of issuance in just a month.
Investors have clearly got over an aversion to these bonds that led to a hiatus in issuance. That occurred after the last wave provoked an angry response from shareholders. French media group Vivendi Universal...
