Across Europe, the Middle East and Africa, only five deals came to market raising just €2 billion; in the US, the number fell from 61 to 35; and in Asia ex-Japan the number of deals slipped to their lowest since the first quarter of 2003.
The $4 billion-worth of issuance in Asia, however, matched that of the first quarter of 2007, which turned out to be a record year for equity-linked issuance from the region.
Volume in the US also held up much better than the fall in the number of deals suggests thanks to three jumbo transactions, all from banks to bolster their capital in the face of asset write-downs. Bank of America’s $6.9 billion, 7.25% convertible was the largest ever public convertible issued in the US.
According to analysts, technical factors are largely to blame for the fall. "Technical factors such as investors’ risk appetite, prospects for new issuance and asset allocation trends are really dominating convertibles at the moment," says Luke Olsen, convertible bond analyst at Barclays Capital. "Investors in many asset classes have been reducing risk, leverage and capital utilization, and convertibles are not immune. This has resulted in some cheapening of the market, which on the one hand has negatively impacted recent performance, but on the other makes it a more attractive entry point for new investing."