Despite macroeconomic and geopolitical uncertainty, the convertible bond market is experiencing a goldilocks moment in 2025. Equity valuations have risen steadily since April, while risk-free rates have dropped over 100 basis points this year. Credit spreads remain historically tight, and volatility continues to run at an elevated level, an ideal environment that enables companies to secure favorable terms through convertible securities.
As a result, 2025 issuance is on track to reach $100 billion, a five-year high. This surge reflects strong investor demand as market participants actively deploy cash reserves, viewing convertibles as an attractive way to balance equity upside potential with downside protection.
Since June, ICR Capital has advised on 15 convertible deals totaling over $8 billion, rapidly expanding our market share to cover over 20% of all recent convertible transactions and more than 40% of those involving an advisor.
Healthcare Sector Convertible Highlights
Healthcare companies have been underrepresefnted in the convertible market in the last couple of years, comprising just 7% of issuance in 2024, compared to 26% in 2022 and 15% in 2023. However, investor appetite for quality healthcare securities is now strong, driven by diversification needs and the sector’s ongoing innovation.
ICR Capital’s Convertible and Equity Derivatives Advisory team has supported several notable healthcare convertible transactions in recent months:
- Celcuity executed a concurrent $210 million convertible and $98 million equity offering following a 170% stock surge after announcing positive top-line data. The convertible offering was meticulously structured to support growth capital needs. The transaction generated over $1 billion in demand, roughly 7x coverage, attracting more than 100 investors including healthcare specialists, mutual funds, and crossover equity investors. Strong demand from long-only investors propelled the stock price an additional 4.6% during marketing.
- Ligand Pharmaceuticals completed a $460 million convertible offering with bond hedge and warrants that raised the effective conversion price to twice the stock price at issuance. This allowed Ligand to optimize capital structure, balancing dilution and cost of capital. The deal saw $2.5 billion in demand with a book 6x covered from over 140 investors. Over $600 million came from long-only investors, who received 60% of the allocation, significantly above market norms. ICR’s Convertible and Equity Derivatives Advisory team was heavily involved in the messaging of the transaction, helping craft and execute outreach to Ligand’s existing investors and research analysts. This targeted marketing effort contributed to Ligand’s stock experiencing only a modest 2% decline on the day of the deal. Additionally, ICR’s advisory expertise and a unique capped call auction process saved Ligand approximately $8 million vs. expected levels.
- Oscar Health engaged ICR for convertible advisory on a $410 million deal that demonstrated robust funding demand in healthcare. We advised on deal sizing, syndicate composition, and documentation, while managing investor amendment processes for a pre-existing private convertible. The offering was priced overnight after a two-day wall-cross involving 30+ investors ahead of the public launch. Demand exceeded $1.6 billion, more than 4x coverage. Our capped call process saved Oscar an estimated $10 million vs. expected levels and protected against dilution until the stock price doubles.
Driving Value, Delivering Results
ICR’s healthcare convertible clients benefit from independent, unbiased advice focused on optimizing outcomes. Our sector expertise and proprietary platforms allow clients to reduce financing costs, limit dilution, and enhance market receptivity.
As convertible issuance accelerates and investor demand scales to new heights, healthcare companies will increasingly leverage these structures to meet capital needs while preserving equity upside. ICR Capital is positioned to guide clients through the complexities of today’s markets, helping them capitalize on favorable conditions to fund growth, innovation, and strategic flexibility.
For more information on how ICR’s Convertible and Equity Derivatives Advisory team supports healthcare clients, please contact us at ICR Capital.
