Alibaba, Baidu lead surge in equity-linked bond sales in Asia

Asian sales of bonds that can be turned into shares have soared in 2025, heading towards multi-year highs, as interest rates remain elevated and rallying stocks create the right conditions for this corner of the market to thrive. 

Led by Chinese companies, firms in the region have sold more than US$30 billion (S$38.5 billion) of convertible and exchangeable bonds in 2025, up from more than US$20 billion in the same period a year earlier, according to data compiled by Bloomberg. Offerings denominated in US and Hong Kong dollars have been particularly popular.     

Concerns about inflation from US tariffs have

kept Federal Reserve officials from cutting rates,

making instruments such as convertibles that pay little or even no interest more attractive for borrowers. For investors, these hybrid securities offer a way to ride the recent rally in Chinese stocks, with limited downside. 

“It has been an extraordinarily busy year and it will continue to be busy,” said Mr Gautam Sareen, head of Asia-Pacific equity-linked and private capital markets at JPMorgan Chase. “Market conditions have never been healthier.”

Demand has been so high for equity-linked securities that all of Asia’s five largest issuances in this space did not have to pay any interest.

China’s Baidu, Alibaba Group Holding and Ping An Insurance Group were among the biggest issuers of these hybrid instruments in 2025.  

Baidu raised US$2 billion from the sale of notes exchangeable into shares of online travel agent Trip.com Group, while Alibaba sold HK$12 billion (S$2 billion) of bonds that can be turned into shares of Alibaba Health Information Technology, following other issuers in taking advantage of the lower funding costs in the Hong Kong dollar compared with the greenback. Ping An raised almost HK$12 billion from its convertible. 

China’s stock market “felt quite solid right after (US President Donald Trump’s so-called) Liberation Day and then rebounded very, very quickly”, said Mr Brian Chau, co-head of equity-linked Asia at UBS Group. “The Asia-Pacific market is at a record strength.”

Elsewhere, Grab Holdings and MakeMyTrip also had big offerings, as did ailing carmaker Nissan, which recently raised 200 billion yen (S$1.74 billion) from one of Japan’s biggest convertible bonds in years.

In South Korea, LG Chem’s US$1 billion exchangeable bond in May revived a market that had dried up in the country in the wake of a 2023 short-selling ban that was lifted only a few months ago.

Although a flare-up of tensions on the geopolitical front or a negative shock for the global economy could shut the issuance window quickly, expectations remain high for offerings to keep flooding in.

Mr Saurabh Dinakar, head of Asia-Pacific global capital markets at Morgan Stanley, said that DeepSeek’s sudden emergence as an artificial intelligence powerhouse and Chinese companies’ low valuations helped kick-start the rally earlier in 2025, and the outlook remained bright. 

Investors now feel that valuations in China are “at a bit of an inflection point and, as a result, they are wanting to get involved and engage in certain sectors”, Mr Dinakar said. “Assuming that we don’t have a wobble from a geopolitical standpoint, our view is that the market will remain active for the balance of the year.” BLOOMBERG