AI Capex Ignites a Historic Surge in U.S. Convert Issuance

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AI Capex Ignites a Historic Surge in U.S. Convert Issuance

Barclays | U.S. Convertibles Strategy

Optimal Entry Point for Growth and Middle Market Issuers

For many growth-oriented issuers, the convertibles market serves as the most efficient initial

foray into credit issuance. Convertible investors have consistently demonstrated a willingness

to support growth-centric companies, even those with limited or emerging credit histories.

Particularly in an environment where small caps demonstrate near-record negative beta to the

10-year yield and face weak earnings revisions, traditional financing avenues can be

prohibitively expensive. By opting for high-premium convertibles, often bolstered by call

spreads, these growth entities can secure vital capital while successfully dodging the severe

dilution associated with straight equity financing.

2H26 Issuance Expected to Maintain Strong

Momentum

The structural pillars supporting U.S. convertible issuance are firmly in place heading into the

second half of the year. Key catalysts driving this continued strength include:

Robust Institutional Demand: The current accommodative demand environment has tipped

the scales firmly in favor of issuers, allowing them to consistently secure highly attractive

pricing terms.

Supportive Rates and Yield Environment: With interest rates and credit spreads remaining

stubbornly high relative to the pre-pandemic era, the potential for significant cash coupon

savings provides a deeply supportive macro backdrop for equity-linked issuance.

Speed of Execution: The asset class offers rapid time-to-market and seamless placement

execution. This overnight pricing capability is frequently leveraged in tandem with concurrent

share repurchases, allowing management teams to immediately optimize their capital