On the level

A recent slump in the convertibles market would seem to indicate that the asset class has reached a plateau after enjoying vintage years in 2001 and 2003. With technical factors militating against further growth, what next for convertibles? Richard Bravo reports

Starting in 2000—while investors were still sitting pretty in the speculative bubble—convertible debt securities began to gain a foothold in the fixed-income market. The asset class appealed to issuers and investors alike: the former were drawn to favorable financing costs while the latter could look forward to a debt investment with the potential for equity appreciation. Convertible supply nearly set a record last year, with $97 billion flowing into the market, making up 7% of all US corporate