Convertible bond prices head south on higher supplies, stock market fluctuations

Stock market fluctuations and increased supplies were responsible for the recent drops in convertible bond prices, analysts said.

Convertible bonds are corporate bonds that are converted to company shares at a set price. As of Wednesday, the value of convertible bonds issued in China this year had reached 94.73 billion yuan ($14.5 billion), up 345.8 percent from the same period of 2016. It was greater than the total amount of convertible bonds issued in the last three years, according to Wind Information Co Ltd, a Shanghai-based financial data provider.

As a result of the abundant supply and market corrections, the estimated value of the convertible bond market is at historically low levels, analysts said. So far, 10 of the 35 subsisting convertible bonds have fallen below their issue price, and investors' enthusiasm for participation in the market is cooling off.