The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Capital Markets

Why European equity-linked isn’t what it used to be

European vanilla convertible bonds just cannot shake the blue funk they are in, even as other regions power ahead. Non-dilutive and synthetic structures have kept bankers busy, but they don’t suit everyone

This year’s convertible bond issuance in the US and in Asia has just surpassed 2017's. Both regions look on track to set 10-year records. But in EMEA the story couldn’t be more different. Volumes in the region are just 43% of last year's total – and are down a third from where they were at this point in the year.

The simplest explanation for the regional divergence is rates. “In Europe we just haven’t had the same level of imperative for issuers to look at convertible bonds,” says Tom Swerling, head of the Europe and Middle East equity solutions group at Barclays.

And with good reason: five-year swap rates in euros have been basically flat over the last 12 months, ticking up briefly to about 50 basis points but now at about 25bp to 30bp. Dollar swaps have gone from 1.75% to close to 3%.

EQL volumes graph new

“That is a real movement,” adds Swerling. “A 125bp move in the yield curve, when companies have been used to funding inside 2% to 3%, has motivated a lot of them to look at the convertible bond market.”

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree