(Bloomberg) -- The biggest US convertible bond issue in nearly two years confirmed that the asset class’s comeback is well underway, as companies seeking to lower the cost of their debt are rushing to beat the market’s looming holiday freeze. 

PG&E Corp. priced a $1.9 billion offering overnight after upsizing it from the initial $1.5 billion target, confirming a Bloomberg News report. The Californian utility company’s issue is the biggest in the US since December 2021, according to Bloomberg calculations, when electric car maker Lucid Group Inc. raised $2 billion in convertible debt.

The US equity-linked volume seen in the two-year stretch at the beginning of this decade is unlikely to be repeated, with $104 billion raised in 2020 and $89 billion in 2021, data compiled by Bloomberg show. Still, the $51.3 billion total so far this year is nearly 73% higher than 2022’s full-year haul, and is set to grow further as investors warm to the assets once again.

PG&E’s upsized offering “shows the convertible investor base remains hungry for new paper,” said Barry Gewolb, chief executive officer of advisory firm HudsonWest LLC.

With the equity market rallying, and lower US Treasury yields on expectations of a rate cut next year, a handful of issuers are pulling the trigger to issue new convertible paper while it remains cheaper than straight debt. PG&E’s issue came just over a week after Uber Technologies Inc. tapped the convertible bond market for $1.73 billion before Thanksgiving. 

“If rates come down again, there’s more of a chance to have lower coupons in the convert space,” said Steve Studnicky, UBS Group AG’s head of strategic equity solutions for the Americas. “It’s going to be a market of windows going forward for the next 12 months.”

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For now, issuers will be working in a tight window ahead of the holiday season.

“Normally, the issuance calendar stays open until mid-December,” Syed Raj Imteaz, head of ICR Capital LLC’s convertible and equity derivatives advisory. The economic calendar in the week of Dec. 11, however, has consumer price index data on Tuesday and the Federal Open Market Committee’s rate decision on Wednesday, he said. 

“It’s possible issuers and investors might seek to conclude their activities by the prior week, to avoid potential market volatility,” Imteaz said.

Using convertibles to refinance offers significant potential savings. PG&E said proceeds from the senior notes, which bear a 4.25% coupon, will be used along with its own cash to prepay about 70% of the loans outstanding under a $2.75 billion secured term loan credit agreement from June 2020, with rates of 8.44% per year. The difference amounts to around $75 million of savings annually, according to industry participants.

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Uber also intends to use some of its convertible bond proceeds to redeem existing senior notes that pay 7.5% in interest, it has said.

PG&E is already leveraging its freshly-raised capital to refinance term loans, though it has downsized the proposed issue to $500 million from $750 million. The utility giant recently announced it will pay a dividend for the first time in about six years, as part of efforts to restore its financial health after emerging from bankruptcy. 

“Demonstrating access to a large pool of capital in the convertible market at an attractive rate can provide negotiating leverage when speaking with debt investors,” said ICR’s Imteaz.

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