Shanghai, China – Recent defaults in the Chinese convertible bond market have sparked global interest, with three companies facing financial difficulties in quick succession. Many investors are questioning the impact of these defaults on the wider financial landscape. However, it is important to note that our global convertible strategies do not involve these specific securities, and the recent defaults are not indicative of broader market trends.

The Chinese companies that defaulted operate in a closed-off sector of the convertible market, inaccessible to non-Chinese investors like Calamos Investments. These companies are significantly smaller than other Chinese issuers accessible to global investors and may not be rated by well-known agencies like S&P or Moody’s. Despite the defaults, our confidence in the resilience of the global convertible market remains strong.

One key reason for our optimism is the historically low levels of defaults in the convertible bond market, especially when compared to high-yield markets. The fundamental strength of the global convertible market is evident in the increasing number of investment-grade rated issuers and the diverse range of companies accessing this form of financing.

Our investment approach focuses on individual convertibles rather than the market as a whole. We believe that the recent defaults in China are isolated incidents and do not reflect systemic issues. By conducting thorough credit analysis and selecting companies with solid fundamentals and attractive valuations, we aim to mitigate risks associated with defaults.

Looking ahead, global convertible issuance continues to show strength, with attractive deal terms and a growing number of companies entering the market with investment-grade ratings. While defaults are an unavoidable aspect of credit markets, our emphasis on rigorous fundamental analysis helps us make informed decisions and construct resilient portfolios.

In conclusion, while defaults present inherent risks in the convertible market, prudent investment strategies and a focus on company-specific factors can help investors navigate through challenges. By staying informed, conducting in-depth research, and actively managing our portfolios, we strive to maximize opportunities while managing risks effectively.