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convertible bonds
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Persistent volatility, a complex macroeconomic environment: why do we believe convertible bonds are a strategic component of asset allocation?
Answer in this article by Brice Périn, Co-Head, Multi Asset, Rates & Credit Specialities, Head of Convertible Bond Management.
Convertible bonds : the winning mix ?
In an environment characterized by persistent volatility and a complex macroeconomic backdrop, we believe convertible bonds are a strategic component in an allocation. Their hybrid structure makes it possible to seize the opportunity offered by equities, while incorporating a bond dimension to moderate shocks. Investors can take advantage of this asymmetrical yield profile.
A dynamic market
In 2025, convertible bonds proved to be Indispensable during episodes of heightened volatility. Example this year, between April 2nd and 8th, when tariffs were announced, equity markets dropped by more than 10%1 while convertibles held up well, declining just 2%¹.
Beyond their structure, the dynamism of the convertible market is also a compelling argument. The year 2025 is already shaping up to be a record year in terms of issuance, with over $154 billion raised as of November 28th2 , more than in the whole 2024 year. This trend is all the more significant in that it affects all sectors and all geographical zones.
Among the ten biggest convertible bonds issues of 2025, we mainly find companies based in the USA - which accounts for almost 70% of the global convertible market - as well as in Asia, notably China and Japan² . These players operate in a wide variety of sectors, including technology, finance, consumer discretionary and staples, illustrating the depth and diversity of the market.
Another historic feature of the convertibles market is its ability to attract innovative issuers, who finance the technologies of tomorrow, making convertibles a mine of future-oriented themes.
Finally, the outflows seen in recent years now seem to belong to the past: the return of demand in 2025 confirms renewed interest and confidence in this asset class.
A relevant solution in an the current environment?
For all these reasons, we believe convertible bonds are a particularly relevant solution in the current environment.
Brice Périn, Co-Head, Multi Asset, Rates & Credit Specialities,
Head of Convertible Bond Management, discusses the attractiveness of this asset class, while emphasising that it is crucial to select bonds with a solid bond floor in order to guarantee their asymmetry in the face of shocks. Hence the importance of being able to rely, as is the case at LBP AM, on experienced teams, particularly for financial and extra-financial analysis, as well as on dedicated tools.
The information provided reflects LBP AM's opinion at the date of this document and is subject to change without notice. All investments involve risk.
¹Source: Bloomberg, data as of 30/04/2025 Indices used: SX5E & SPX (for equities) and FTSE Convertible Europe Focus H (for convertibles)
²Source: BofA Global Convertibles Research, data as of 30/11/202