Convertible issuance set a new record in 2020 with $113.7 billion of new issuance. The surge in issuance can be attributed primarily to growth sectors, such as Tech and Healthcare, and a significant number of issuers from recovery companies, primarily in the Consumer Discretionary sector, many of which were negatively impacted by the Covid-19 crisis. Sector and issuer composition has significantly broadened the investible landscape, especially as we enter an economic recovery.

While we expect 2021 issuance to remain strong, the pace will likely moderate as market conditions normalize over the year. We believe issuance supply will be supported by the sharp earnings rebound from a cyclical recovery, healthy equity valuations, increased issuer capital spending, attractive pricing, and the presence of several large issuers. In addition, since there is still uncertainty on the timeline of normalization, we believe issuers will utilize Convertibles as a low-cost source of new capital to address any potential liquidity events and for liquidity insurance purposes.