Asia falls back in love with convertible bonds – for now
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CAPITAL MARKETS

Asia falls back in love with convertible bonds – for now

Hefty convertible bond sales by the likes of Chinese firms Lenovo and Alibaba, plus renewed interest in issuance from corporate Japan, have the market chattering. Is the market here to stay in Asia, or could a single soggy offering cause it to slam shut again?

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Photo: Reuters

After a couple of lean years, convertible bonds (CBs) are enjoying a renaissance in Asia.

On Tuesday (June 4), the Chinese online travel agency Trip.com completed a $1.3 billion sale of convertible senior notes due 2029 to pay down debt and boost its capital reserves.

Two weeks earlier another big mainland digital firm, Alibaba, issued $5 billion in convertible bonds, marking a record dollar-denominated sale by an Asian corporate.

It is a timely return to form for an asset class whose fortunes have always tended to wax and wane. This year is a case in point.

The first four months were comparatively quiet, with $6.48 billion raised across 25 Asia Pacific sales, according to Dealogic.

Then it sprang sharply to life. Alibaba’s blockbuster trade and a $2 billion sale of five-year CBs by Beijing-based e-commerce firm JD.com, completed two days apart, helped make May the strongest single month for the asset class in Asia Pacific in three years, with $7.33 billion raised via five sales, Dealogic data shows.

It is also worth noting that a number of 2024’s biggest deals have been far from straightforward.

Leap in the dark

Quite apart from its size and international reach – it was six times oversubscribed and won orders from around 250 investors, including a strong buy-in from US funds – the Alibaba offering was notable in other ways.

For


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