Headline: Mad as a midsummer banker Source: Euromoney Date: August 2001 Author: Tom Marshall
What’s particularly baffling is that bankers are skating on thin ice in one of the safest areas of the market – convertibles. In June, French cement company Lafarge came to market with a e1.5 billion convertible bond. Lead managers Schroder Salomon Smith Barney and Société Générale did it as a bought deal with a conversion price of e130. By the afternoon of the same day, the banks realized that the deal probably wouldn’t get done at that level. However, under French rules, a fixed-term bond cannot be repriced. The only option was to start all over again, this time with a conversion premium of e127 – a fall in value of about 2.3%. |