From Yahoo Finance: 2025-03-26 19:53:00

South Korea is anticipating a surge in convertible bond issuance once the short-selling ban is lifted, attracting hedge funds who are major buyers of such debt. Goldman Sachs and BNP Paribas project a rise in convertible offerings, offering companies a cheaper funding alternative and investors the potential for profit through equity swaps.

The ban on short-selling is set to be lifted on March 31, expected to normalize pricing in the financial market and provide companies with easier access to funding. New convertible bond issues are anticipated from both investment-grade and high-yield companies seeking financing options previously unavailable due to the ban. Dollar convertible sales surged in 2023, with expectations of a return to pre-ban activity.

As the ban on short-selling is lifted, convertible bond sales are expected to increase, particularly among companies in high-growth industries and capital-intensive sectors. However, companies may wait for stock volatility to stabilize before proceeding with convertible offerings. Korean authorities have implemented safeguards to prevent disorderly shorting bets post-ban lift.

The revival of convertible bond sales is seen as a positive development for financially distressed companies, offering them a lifeline for raising capital. The increased interest in convertible arbitrage strategies could lead to a spike in convertible bond offerings as companies seek alternative funding sources. The move is expected to benefit both issuers and investors in the market.

Read more: Goldman, BNP See Korean Convertible Boom as Shorting to Resume