Global Convertibles Chartbook: Hyperscalers have entered the chat

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Global Convertibles Chartbook: Hyperscalers have entered the chat

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Global Convertibles Chartbook

Hyperscalers have entered the chat

AI selloff cooled CBs, but redemptions “locked-in” gains 01 July 2026

Globally, convertible bonds returned -0.3% outright last month, cooling the sizable rally Convertibles

the market has enjoyed since April, as investors tamed their AI expectations and priced- Global

in higher-for-longer interest rates. While high-flying Korean and US chipmakers bore the

brunt of the stock weakness last month, CBs were relatively spared given the sizable H1

redemptions from such names, including Lumentum, and Seagate—effectively “locking-

in” most of their year-to-date gains for CB managers. Held dollar-neutral, CB returns

also slowed in June (-0.1%, according to HFR). Year-to-date, global CBs remain the

leading asset class (+18.0%), ahead of equities, corporate bonds, and sovereign debt.

In H2, CBs are well-positioned to trade AI with less risk MichaelCBs, PfdsYoungworth,& Derivs StrategistCFA

Reflecting last month’s price action, we believe the CB market remains well-positioned BofAS

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heading into the second half as the market offers asymmetric exposure to the AI trade michael.youngworth@bofa.com

(about one-third of the market)—a key benefit as investors cannot afford to sit on the

sidelines despite frothy pricing and greater risks of tail events. Into year-end, we’re Chartbook access:calling for continued, yet more modest upside, though we concede that narrow market

Access the Global Convertiblesbreadth and full valuations pose challenges. Additionally, we believe the supportive

Chartbook.backdrop for convertible arb (namely elevated single-stock vol and robust new supply) is