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New research paper: investing in global convertible bonds

27.01.2017

Natixis Asset Management’s Fixed Income investment division is pleased to present its latest research publication. Composed by the Quantitative Research and Analysis team, the document highlights the theme of global convertible bonds.

“A convertible bond gives its holder the right to convert a bond, which is exposed to credit risk, into a predetermined amount of shares. This attribute makes the convertible bond a hybrid asset between credit and equity. It would thus be tempting to consider it as a com¬promise between both asset classes. Reality is sometimes slightly different.[…]

There are indeed fundamental differences in how convertible bonds are considered in different regions: in the US, they are considered to be equity-like, whereas they function more like debts in Europe.[…]

In this asset manager’s tour of convertible bonds, we first compare convertible bonds with equity and credit, focusing on risk and diver¬sification. We then consider the differences between convertible bonds of different regions, valuation and finally the diversity of sources of performance.”

 

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