Some Chinese convertible bonds are 330% oversubscribed. What's the problem?
Issuance of equity-linked instruments has surged. Notably, a Chinese convertible bond deal had more than $1 trillion in demand.
The Financial Times reported Chinese Bank Raises More than $7 Billion with Record Convertible Bond.
Bit of Advice
Michael Pettis at China Financial Markets has this bit of advice:
...costs by shorting volatility, it is a worrying sign. This stuff may feel like equity, but it’s always at the worst possible time that you discover that it is really debt.
— Michael Pettis (@michaelxpettis) October 30, 2019
"This stuff may feel like [cheap] equity, but it’s always at the worst possible time that you discover that it is really debt."
I took the liberty of adding the word "cheap".
Seems appropriate give given the massive over-subscription at world record levels.
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