Global Convertibles: Key Trends and Insights Q2 2025

After a turbulent start to Q2 2025, the convertibles market staged a powerful comeback—what happened, and what’s next? Get critical insights in Numerix’s market report, Global Convertibles: Key Trends and Insights Q2 2025, a must-read for market participants navigating volatility, shifting macro trends, and evolving deal dynamics in equity-linked financing. 

Inside the Report: 

• A rebound story: How temporary trade deals and macro stabilization unlocked a $50.7B issuance surge
• The rise of megadeals: Why 17 issuances exceeded $1B respectively—more than double last year’s pace
• Broader participation: From tech to retail to chemicals—convertibles are going mainstream
• Regional and sector breakdowns across North America, Europe, and Asia-Pacific
• Top 10 deals and what they signal about evolving issuer strategies—and more!  

Market Highlights 

The April 2025 U.S. tariff hikes triggered a sharp freeze in convertibles issuance—but May and June saw a swift turnaround as confidence returned. Issuers and investors alike are rethinking how convertibles can serve as both capital-raising tools and portfolio performance drivers in dynamic markets. 

Whether you're managing issuance strategy, portfolio risk, or evaluating hybrid securities, this report offers data-backed analysis to help you stay ahead in the convertibles landscape.  

Learn More

Discover how the Kynex-Integrated Platform for Convertible Bonds provides unmatched insights into the global convertible securities markets. 

FAQs

How did the global convertible bond market recover after the April 2025 U.S. tariff shock?

A 10% baseline U.S. tariff introduced on April 5, 2025, triggered a bond sell-off, equity market decline, and a near-complete freeze in convertible issuance as the cost of capital spiked, according to Numerix. The recovery was sharp: May 2025 saw more than $19 billion in new issuance — more than double April's total — and June alone contributed $27.8 billion, more than twice June 2024's volume. The rebound was driven by a 90-day tariff suspension, temporary trade agreements with China and the UK, and tightening credit spreads as equity markets recovered. Q2 2025 ended at $50.7 billion, up 26% year-over-year.

What does the surge to 17 convertible megadeals in H1 2025 signal about how the market is changing?

In the first half of 2025 alone, 17 convertible bond issuances exceeded $1 billion in size — compared to just seven in all of 2024 — according to Numerix. This is not a cyclical uptick. It reflects a structural shift: convertibles are no longer niche instruments for mid-cap growth companies; they are becoming mainstream capital-raising tools for large-cap issuers moving hundreds of millions of dollars efficiently. Average deal size in Q2 2025 reached $724 million — above historical norms — confirming that the market has entered a new size regime that requires institutional-scale analytics infrastructure to price and hedge accurately.

How did global convertible issuance in Q2 2025 compare to Q2 2024?

Q2 2025 convertible issuance reached $50.7 billion across 69 deals, a 26% increase from $37.6 billion in Q2 2024, according to Numerix. Redemptions declined slightly to $30.5 billion from $32.1 billion, improving the issuance-to-redemption ratio and signaling rising issuer confidence. The most striking single data point: June 2025 alone generated $27.8 billion — more than the entire Q1 2025 total — demonstrating that pent-up demand from the April tariff freeze released sharply once market conditions stabilized. The combination of higher volume, improving net issuance, and growing deal count suggests Q2 2025 marked a genuine market expansion rather than a bounce.

What is the difference between Europe's and Asia-Pacific's convertible bond market trajectories in Q2 2025?

Europe delivered the fastest year-over-year growth of any region in Q2 2025 — up 231% from $1.6 billion to $5.3 billion across 10 deals — despite remaining third globally in absolute volume, according to Numerix. Asia-Pacific posted 10 deals totaling $6.2 billion, consistent with its recent trajectory, but notably Japan contributed zero deals. North America remained dominant with 49 deals and $37.9 billion. The divergence reflects different dynamics: Europe's surge suggests renewed issuer confidence and institutional demand for hybrid instruments, while APAC's steady growth reflects a broadening issuer base. Japan's absence is a structural signal, not a data gap.

How does the Q2 2025 Utilities sector emerging as a significant convertible issuer affect portfolio construction for fixed income investors?

Utilities posted seven deals totaling $5.0 billion in Q2 2025 — a sector historically absent from convertible markets — according to Numerix. This broadens the convertible universe beyond its traditional growth-sector concentration and introduces a different risk profile for portfolio managers: utilities carry lower equity volatility, more predictable cash flows, and different credit dynamics than technology or healthcare names. For convertible arb traders, utilities issuance creates relative value opportunities where credit spread and equity volatility assumptions differ from those embedded in the bond's pricing — precisely the type of mispricing that systematic convertible strategies are designed to identify.

How does real estate sector convertible issuance in Q2 2025 introduce new risks for institutional investors?

Real estate recorded five deals totaling $2.0 billion in Q2 2025, according to Numerix. Commercial real estate convertibles carry a specific risk profile: property valuations are sensitive to interest rate movements, which directly affects the equity leg of the convertible structure while simultaneously influencing the bond's discount rate. In a rising-rate scenario, the equity optionality embedded in a REIT convertible can deteriorate as the underlying property values fall and the conversion option moves further out-of-the-money. Accurate pricing requires integrated modeling of rate sensitivity, equity sensitivity, and credit spread dynamics — all simultaneously, not in isolation.

How much did North America's average convertible deal size grow in Q2 2025, and what does it mean for execution?

North American convertible deals in Q2 2025 averaged approximately $773 million, with 49 deals generating $37.9 billion — the dominant share of global volume, according to Numerix. Deal sizes at this scale introduce practical execution challenges: a $700–800 million convertible position creates meaningful market impact when delta-hedging the equity leg, particularly in less liquid underlying stocks. Portfolio managers running large convertible books must model the market impact of their own hedging activity and sequence trades to minimize slippage — a workflow requirement that separates institutional-grade execution from standard order routing.

How does the tariff-driven issuance freeze in April 2025 illustrate the sensitivity of convertible markets to macro policy events?

The April 2025 tariff shock demonstrates that convertible issuance is highly sensitive to sudden changes in the cost of capital. When the 10% U.S. tariff baseline was introduced on April 5, 2025, the simultaneous bond sell-off, equity decline, and credit spread widening made convertible pricing economics unattractive for both issuers and investors — freezing the market almost immediately, according to Numerix. The rapid recovery in May and June shows resilience, but also that convertible desks need real-time scenario analysis capability to assess how policy-driven macro shocks affect their live book: spread widening, delta shifts, and credit deterioration can all occur within a single trading session.

How does the 26% year-over-year increase in global convertible issuance in Q2 2025 compare to broader fixed income market growth?

Global convertible issuance grew 26% year-over-year in Q2 2025 to $50.7 billion, according to Numerix — a growth rate that significantly outpaces traditional investment-grade and high-yield issuance in the same period. This reflects a structural reallocation by corporate treasuries: in a higher-rate environment, convertibles allow issuers to pay below-market coupons while offering investors equity participation, making them materially cheaper than straight debt for growth-oriented companies. The 26% growth in a single quarter, following Q1 2025's 18% deal count increase, confirms a multi-quarter trend of convertible market expansion rather than a single-period anomaly.

What does Europe's 231% convertible issuance growth in Q2 2025 mean for global institutional investors building EMEA coverage?

Europe's convertible issuance surged 231% year-over-year in Q2 2025, from $1.6 billion to $5.3 billion across 10 deals, according to Numerix. For global institutional investors, this growth signals a market transition: European issuers are actively entering a financing instrument that was previously dominated by North American and APAC companies. Building EMEA convertible coverage now requires pricing infrastructure calibrated to European credit curves, equity volatility surfaces for European underlyings, and compliance with MiFIR reporting obligations — a different operational setup than a North America-focused convertible desk. Firms that build this infrastructure early gain first-mover advantage in a market growing faster than its peers.

How do the issuance patterns in Q2 2025 inform relative value analysis for convertible bond traders?

Q2 2025's sectoral distribution — Information Technology and Consumer Discretionary each contributing over $14 billion, with Utilities ($5.0B), Financials ($2.4B), Real Estate ($2.0B), and Energy ($1.8B) filling out the remainder — creates a rich cross-sector relative value landscape, according to Numerix. Bonds in different sectors with similar credit ratings carry materially different equity volatility profiles, coupon structures, and conversion premiums. Systematic convertible traders exploit these differences by identifying bonds where the implied equity volatility embedded in the convertible's price diverges from the issuer's observed equity volatility — a signal that the bond is either cheap or rich relative to its theoretical fair value.

How does the decline in Q2 2025 redemptions affect overall convertible market liquidity for active managers?

Q2 2025 redemptions declined to $30.5 billion from $32.1 billion in Q2 2024, while new issuance grew to $50.7 billion — producing a net positive issuance position, according to Numerix. For active convertible managers, declining redemptions combined with rising issuance expand the investable universe: there are more bonds outstanding, more diversity across sectors and geographies, and less forced selling from maturing positions. A growing market with improving net issuance is generally more favorable for relative value strategies, as it reduces the likelihood that the same few names dominate the universe and introduces fresh pricing inefficiencies that systematic strategies can identify.

How does the Consumer Discretionary sector's $14.4 billion in Q2 2025 issuance create specific pricing challenges for convertible analysts?

Consumer Discretionary contributed 15 deals totaling over $14.4 billion in Q2 2025 — nearly matching Information Technology's $14.6 billion — according to Numerix. Consumer discretionary issuers include e-commerce platforms, retail chains, and consumer brands with equity valuations highly sensitive to consumer spending data, earnings surprises, and macro sentiment shifts. For convertible analysts, accurately pricing these bonds requires volatility surfaces calibrated to consumer sector dynamics, not generic equity market volatility assumptions. Earnings periods can cause sudden delta shifts in consumer convertibles that require real-time repricing — a workflow that offline or batch-based analytics systems cannot support.

What does Q2 2025's $724 million average deal size imply for the institutional infrastructure required to participate in the convertible market?

The Q2 2025 average convertible deal size of $724 million — above historical norms, according to Numerix — signals that convertible financing is increasingly a tool for large, well-known issuers with active equity markets. For institutional participants, larger deals mean larger delta-hedge positions, more significant market impact when managing hedges, and more complex scenario analysis requirements. A $700 million convertible position requires analytics that can stress-test the position across rate moves, credit spread changes, and equity volatility shifts simultaneously — not just individually. Firms using legacy pricing infrastructure designed for smaller, simpler books will encounter model risk at this deal scale.

How should institutional investors use Numerix quarterly convertible market reports to inform portfolio strategy and new issue evaluation?

Convertible portfolio managers need market intelligence at three levels: macro (total issuance, regional distribution, sector concentration), structural (deal sizes, premium ranges, maturity profiles), and issuance velocity (monthly trends, rebound patterns after shocks). Numerix quarterly convertible market reports provide all three, using proprietary deal-level data that is not available through generic fixed income data vendors. According to Numerix Q2 2025 data, the combination of tariff-shock recovery speed, megadeal surge, and European market emergence were all early signals visible in quarterly data before they became consensus market narratives — giving investors who track this data a window into structural shifts before they fully price into secondary market valuations.