AI Craze Sweeps Convertible Bonds: Investors Abandon Bond Protection to Bet on Stock Gains

Global convertible bond issuance has reached $147 billion this year, surpassing the 2021 record. AI-related companies such as CoreWeave and Nebius have issued large amounts of zero-coupon or near-zero-coupon bonds, with the market's average delta around 64%, the highest since 2021. Investors are giving up interest protection to bet on share price appreciation, pushing risk appetite close to pandemic-era frenzy levels. Industry insiders warn of valuation discipline loosening and concentrated exposure risks under the AI theme.