FirstFT: US companies dive into convertible debt

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US companies have been piling into the market for convertible bonds as they search for ways to keep their interest costs down, in a rare flurry of activity in otherwise subdued corporate fundraising markets.

Issuance of convertible debt climbed 77 per cent last year to $48bn, according to data from LSEG, making it one of the only areas of capital markets to return to pre-pandemic averages after 2022’s market downturn.

Experts say the boom in convertibles, a type of bond that can be swapped for shares if a company’s stock price hits a pre-agreed level, is likely to continue this year as companies refinance a wave of maturing debt. Read more on the growth of convertibles that have in the past been seen as “spivvier products”.

And here’s what else I’ll be watching today:

• US Federal Reserve: The Federal Open Market Committee issues minutes from its December meeting, where officials kept interest rates at a 22-year high.

• Economic data: US job openings, a proxy for labour demand, are expected to have declined in November when they are released today. The Institute for Supply Management’s manufacturing purchasing managers’ index is also released.

• Israel-Hamas war: The leader of Hezbollah, Hassan Nasrallah, is expected to speak later today following the death of a senior Hamas political leader, more of which below.

Read our special edition of the Week Ahead newsletter for big moments in the diary for the year ahead.

Five more top stories

1. A senior Hamas political leader has been killed in an explosion in Beirut, along with at least two of its military commanders. The Palestinian militant group and Lebanon blamed an Israeli drone strike, which if confirmed would mark the first targeted attack against a Hamas leader outside of Palestinian territories by the Jewish state since the war started. Here’s what we know so far.

2. Carmakers have warned that tearing up the Inflation Reduction Act will hurt the growth of US electric vehicle sales after former president Donald Trump’s advisers told the FT he planned to gut the country’s cornerstone green legislation if he is elected. Here’s what’s at stake for the industry if subsidies are rolled back.

• Tesla news: Elon Musk’s Tesla has been knocked off the top spot as the world’s best-selling electric-vehicle maker for the first time by BYD, the Chinese EV maker backed by Warren Buffett.

3. Japanese authorities are investigating the communications between the control tower and aircraft in the moments before a deadly runway collision between two planes at Tokyo’s Haneda airport. Authorities said they had retrieved the flight and voice recorders of the Coast Guard plane, but had not found their counterparts in the JAL aircraft that was struck. Here’s what we know so far about the investigation.

4. Claudine Gay has resigned as president of Harvard University after her widely criticised appearance at a congressional hearing plunged the elite institution into a bitter national debate about campus antisemitism and prompted scrutiny of plagiarism allegations against her. Gay, Harvard’s first black president and only the second woman to lead the university, was a professor of political science at Stanford University before joining the faculty at Harvard. The university named an interim successor.

5. Donald Trump has asked a court in Maine to reverse the decision by Shenna Bellows, Maine’s secretary of state, who last month disqualified the former president from seeking the presidency under the 14th amendment of the US constitution. Trump is expected to file a separate appeal to the US Supreme Court and ask the nation’s highest court to overturn a decision by Colorado to also block him from running. Trump’s poll numbers have risen despite his legal troubles.

The Big Read

On Sunday morning, a Bangladeshi will cast the first vote in their country’s fraught national elections and set in motion the most intense and cacophonous year of democracy the world has seen since the idea was minted more than 2,500 years ago. Some 2bn people, about half the adult population of the globe, will have the chance to vote in 2024, far more in one year than ever before. But even as they mark the spread of political freedom, these elections are also taking place amid spreading illiberalism and creeping disillusionment.

We’re also reading . . . 

• Inflation: The US, UK and eurozone are on course to declare victory against inflation this year, but difficult trade-offs await, writes Chris Giles.

• Russian murderers: Thousands of prisoners convicted of gruesome crimes have been pardoned in exchange for fighting against Ukraine, to the horror of victims’ families.

• SoftBank’s bad bet: The founders of IRL are locked in competing lawsuits with the Japanese group, which ploughed $150mn into the social media app that sought to be the next Facebook. But the platform’s former staff tell the FT there were problems from the start.

Chart of the day

Record inflows into US money market funds in 2023 have triggered a multibillion-dollar fee bonanza for the asset management industry. Providers such as Fidelity, Vanguard and Charles Schwab had for years treated money market funds as a loss-leader but that has now changed.

Take a break from the news

A spirit of inclusiveness is driving a trend for running clubs that are convivial, not competitive. The FT’s Emma Jacobs joined the Runners High Run Club and discovered the perks of slow running.

Additional reporting by Tee Zhuo and Emily Goldberg