Daniel Partlow, chief risk officer at Advent Capital Management, joins the podcast to discuss convertible bonds. Partlow is a specialist in these securities, having written a book on the subject titled ‘Convertible Securities: A Complete Guide to Investment and Corporate Financing Strategies.’
Content Highlights
- First, the basics: What are convertible bonds and how do they work? The asset class has actually been around for more than three centuries… (3:29);
- Some of the characteristics of converts include a maturity of about four to five years but with low interest rate sensitivity of much shorter duration bonds (6:42);
- A typical balanced convert will provide downside protection (via the bond floor) and upside potential through the equity participation (9:18);
- Converts have done well in inflationary environments, with less volatility than stocks (11:44);
- The default rate for converts is a fraction of high yield and leveraged loans (20:38);
- Background on the guest (24:59);
- The specter of stagflation and how converts can protect against that (27:50);
- Where might there be particular opportunities in the converts market right now? (33:07);
- Examples of individual securities that may be of interest (37:52).