The Convertible Bond Boom: An Expert Looks Under the Hood

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ICR Capital's Raj Imteaz explains the current convertible craze and demystifies complexities like the capped calls used to curb dilution.

The race to fund AI has corporations raising capital across every market available to them, and a growing number are turning to the convertible bond . Issuance of convertibles set a record in 2025 and is running faster still this year, as companies weigh the lower coupons they offer against a potential obstacle: Because investors can convert the bonds into stock at a preset price, a rising share price can dilute existing shareholders.

In a new, sponsored episode of NeuGroup's Strategic Finance Lab podcast available now on Apple and Spotify , peer group leader Andrew Weber speaks with Raj Imteaz , head of convertible and equity derivative advisory at ICR Capital , to break down what's fueling the surge, how a treasury team can tell whether a convertible fits its balance sheet, and how to handle what can be a complex execution process.

Raj Imteaz, ICR

Much of what's driving the boom, Mr. Imteaz says, is the enormous capital that high-performance computing and AI (HPC-AI) build-outs demand, pulling a widening set of issuers into a market long dominated by high-growth and tech names.

Against straight debt or equity, the pitch is straightforward: a far lower coupon than regular bonds, and much less dilution than an equity raise. But Mr. Imteaz is clear that a convertible is just a tool in the toolkit, not necessarily fit for every balance sheet.

He unravels the intricacies of the capped call, also known as a call spread, an overlay companies buy to push out the point at which a rising stock creates new shares—essentially, an insurance policy to mitigate stock dilution.