The US convertible bond market experienced a record-breaking year in 2025 and is continuing this trend into 2026, largely driven by companies with ties to artificial intelligence. In 2025, issuance topped $120 billion, making it the busiest year on record. This surge was also reflected globally, with companies issuing convertible bonds at the fastest pace in 24 years, reaching approximately $166.5 billion in 2025, just shy of a historic record, according to data compiled by Bank of America Global Research.
This rapid growth has continued into 2026, with 18 companies raising nearly $13.6 billion from equity-linked securities through February 18. This represents a substantial increase of more than 556% compared to the volume in the same period of 2025. Companies like Alibaba Group Holding Ltd., Lumentum Holdings Inc., and Super Micro Computer Inc. have been active participants, utilizing convertible securities to finance their AI-related investments.
The appeal of convertible bonds is heightened by factors such as high interest rates and equity volatility, which make them attractive to both issuers seeking cheaper financing and investors looking for upside potential. The strong demand for AI financing has also led to a reordering of risk hierarchy in the bond market, with some emerging-market bonds becoming comparable or even more attractive than those of certain US tech giants due to the heavy borrowing by US Big Tech firms.
