Convertibles had a good April. According to figures from Dealogic (cited in the Financial Times), convertible issuance last month was the highest it’s been since July 2008 and 22 times higher than it was in March.
Convertibles’ comeback follows a difficult moment for the asset class following the collapse of Lehman. Along with everything else, convertibles were dumped in the quest for liquidity, often at prices below the value of the bonds they were linked to.
But with equity markets more stable and companies needing to refinance, convertibles have become the vehicle of choice. WPP, Arcelor Mittal, United States Steel and, most recently,the US house builder DR Horton, have all issued them in the past month.
This should be good news for convertibles professionals. Credit Suisse, for example, said its convertibles business returned to profit in the first quarter.
One equity derivatives-focused headhunter, proclaims that hiring is imminent.
“Citigroup are said to be interviewing for convertibles traders at the moment,” he says. “And Credit Suisse could benefit from boosting their trading team. As issuance goes up you will need more people to trade and underwrite the issues.”
Typically, this may be too good to be true. The proximity of convertibles hiring is disputed: another headhunter working in the area points to the fact that even after a strong April, year to date convertibles issuance is still down more than 60% on last year.
“There’s a little bit of hiring out there, but hardly any. The primary market would have to recover a lot more substantially to make any difference to staffing,” he says.