Convertible bonds: Is this love, or a teenage crush?

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The US primary convertible bond market has grown rapidly this year, providing low-cost funding to highly rated corporates at a time when other sources of capital are running dry. The market's proponents claim convertibles have matured into a mainstream financing instrument. But the high degree of structuring suggests that many deals this year have been pure volatility plays sold to a new breed of hedge fund investors that might withdraw as quickly as they appeared.