Convertible bond issuance in EMEA has started strong in 2026, as robust aftermarket performance and renewed investor appetite have encouraged issuers back to the market.

Volumes of convertible bonds issued in the first quarter of 2026, so far, reached USD 3.73bn across 11 deals so far, up from USD 1.69bn across 12 deals in the fourth quarter of 2025, and higher than the USD 3.12bn seen across nine deals in the corresponding quarter last year, according to Dealogic data.

Flagship transactions in 2026 YTD include MTU Aero Engines (USD 700m), Vinci (USD 590m) and Snam (USD 584m), sowing the dominance of the manufacturing and energy sectors.

Bankers and investors point to a supportive aftermarket across the 2025 cohort of European CBs, with paper trading constructively and liquidity metrics improving.

Legrand SA’s EUR 800m (USD 920m) convertible bond issued on 18 June 2025 was cited by bankers as one example of strong demand and positive secondary performance. The bond was trading around 118.97 as of mid-February 2026.

“It’s been a very strong start to the year,” said an equity-linked banker. “Performance last year really helped. Convertibles delivered around 20% returns, broadly in line with equity indices, which brought investors back into the asset class.”

The banker added that the investor mix has shifted materially. “We’ve also seen a meaningful return of long-only investors. Around 50% of allocations have gone to long-only funds, which we didn’t see in 2023 or 2024. 2026 feels much more balanced.”

Market participants said 2025 marked a turning point for the asset class after a subdued period. Issuance had slowed sharply in previous years as issuers worried about dilution, investors stepped back from credit-linked equity instruments, and many corporates remained well funded after raising capital in the immediate aftermath of the COVID-19 pandemic.

“Investors are also looking to rebalance towards Europe, and with all else being equal, risk appetite is stronger. It’s a relatively small market, and there’s always a bit of a snowball effect. Once issuance starts working, other issuers quickly follow,” the equity-linked banker said.

Issuers are also being drawn by relative funding advantages, banking sources noted.

Convertibles can offer coupon savings of around 2% per year versus straight bonds, while allowing companies to issue equity at higher levels. The return of well-known, high-quality names has further helped restore confidence.

“The fact that well-known, high-quality names are coming back to the market has also helped,” the banker said. “This year the issuer base has been more diversified, with names like MTU.

“Importantly, transactions are working for investors as well.”

Defence and industrial names have been particularly popular, with investors also showing interest in real estate and selective technology stories where fundamentals are strong and growth visibility is clear.

A third ECM banker described the current environment as cautiously optimistic.

“Encouraging that the year started with a bang,” the banker said. “High-quality large caps help bring others. That feeds confidence. Investors are not buying just anything.

“You can price more aggressively in liquid names and push the envelope, but small-cap illiquid names cannot.”

The second ECM banker said the recovery appears durable. “We think the convertible bond market revival runs deep and we expect volumes to remain supportive,” the banker said. “Secondary market trading across the convertibles complex is robust, which shows there is strong demand for paper. Secondary liquidity metrics are improving, with tighter bid-ask spreads and deeper participation.”

Bankers also pointed to a growing pipeline, supported by an estimated EUR 4bn-plus of EMEA convertible bonds maturing in 2026, with refinancing needs emerging across commercial real estate and industrial issuers.

Several sources said mandates are already lined up for launches in the coming weeks, with three to four deals expected before early March, barring market volatility.