- 2025 was a record-breaking year, surpassing 2020 as the most active year in the history of the US convertible market. Q4 new issuance activity remained robust with ~$34 billion in supply, bringing total issuance for the year to ~$124 billion.
- Refinancing activity dominated convertible issuance in 2025: approximately 50% of issuers this year used convertible proceeds to repay outstanding debt obligations.
- Similar to prior years, technology was again the most robust sector in 2025, accounting for 32% of new issuance volume. There was also a resurgence of healthcare transactions in Q4, and a number of precious metal / rare earth companies accessed the market in the second half of the year.
- In 2025, there were 51 convertible transactions with a size of $1 billion or greater. With favorable market conditions, companies were able to execute mega-financing deals in an efficient manner.
- Issuers achieved historically attractive financing terms in 2025: 46 deals were priced at zero coupon and ~45% of deals achieved <1% coupon. The rate cut cycle was a key catalyst driving ultra-low financing costs.
Issuance was spread across a variety of sectors. Technology companies led the group again this year, with 40 new issues raising a collective $49 billion and accounting for 32% of total volume. Notably, the second half of the year saw a surge in issuance from the AI infrastructure space as well as from precious metals companies. Separately, we saw renewed investor interest in the healthcare space after a few quiet years with higher rates and compressed equity valuations. We expect the healthcare sector to remain active in the new year. Separately, a few precious metal and rare earth companies also accessed the convertible market in the second half of the year.
Average Convertible Debt New Issue Coupon Rate and Conversion Premium 2022 – 2025
| Sector | 2022 | 2023 | 2024 | Q4 2025 | 2025 |
|---|---|---|---|---|---|
|
All Deals |
3.45% / 29% |
3.50% / 30% |
2.62% / 31% |
1.90% / 32% |
1.92% / 33% |
|
Technology Sector |
2.68% / 31% |
2.80% / 27% |
1.86% / 34% |
1.18% / 30% |
1.19% / 32% |
|
Healthcare Sector |
3.08% / 30% |
2.56% / 30% |
2.69% / 31% |
0.46% / 32% |
1.52% / 34% |
|
Average 5y UST |
3.00% |
4.06% |
4.13% |
3.68% |
3.92% |
Pricing Results: Theoretical Value: The graph below illustrates the theoretical values of deals priced in 2025. A value of 100 represents a transaction pricing at fair value with no “cheapness”, and anything greater than 100 represents some new issue concession. The average cheapness in Q4 was 2.2 points, slightly above the full-year average of 2.0 points. New issue concessions widened slightly in the fourth quarter, with some signs of investor fatigue in the November/December window after heavy issuance volumes in the preceding months.
Pricing Results vs. Price Talk: Pricing outcomes throughout the year generally favored issuers, with more than 80% of deals pricing at or better than the midpoint of price talk. It is worth highlighting that every single deal in October priced at the midpoint or better, which speaks to the near-optimal market conditions at that time. The consistently issuer-favorable results suggest that issuers and banks may have been able to be more aggressive with their initial marketing ranges in certain situations.
Secondary Trading: The convertible asset class delivered strong absolute returns to investors in 2025, with the Bloomberg convertible index realizing an ~18% gain. Valuations in the secondary market have been driven by compressed credit spreads and the continuation of the rate cut cycle, as well as elevated volatility levels throughout the year.
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