银洛希尔年月关于可转换债券交易品种的培训材料.pptxVIP

18 OCTOBER 2004Convertible bonds Presentation to AgendaOVERVIEW What are convertible bonds?Convertible bond structuresExchangeable bondsEquity-linked market conditionsArbitrage techniques2 What are convertible bonds? Convertible bonds are hybrid productsWhat is a convertible bond?Convertible bonds are hybrid instruments that stand somewhere between a debt instrument and equityConvertible is effectively a bond which gives its holders the right to convert for a fixed number of ordinary shares at a fixed priceBondholders receive:At maturity, if not previously converted, convertibles are worth:The greater of their cash redemption value and The market value of the shares into which the bonds are convertibleFixed yield to maturity / yield to putCoupon ? yield where issue price differs from redemption or put price……. or in exchange for cancelling the Bonds……..BondFixed number of shares at a fixed priceShares4 Trade-off of option value vs bond valueConvertible bonds - the componentsConversion premiumVolatilityMaturityCall structureDividendsInterest ratesOption Value5 - 15%BondValue85 - 95%Maturity / PutInterest ratesCredit spreadCouponRedemption priceHigher yieldHigher conversion premiumMore debt-likeLower yieldLower conversion premiumMore equity-like5 Option valuation drivers6 Option valuation drivers (cont’d)7 Bond valuation drivers8 Bond valuation drivers (cont’d)9 Convertible financing offers issuers a number of advantagesAdvantages of convertible bondsLow cost debtOption value allows Issuers to achieve sub-market interest rateBenefits enhanced by prevailing interest rate environmentContingent equity sale at a premiumEquity raised at a premium to prevailing share price No immediate EPS dilution - but impacts fully dilutedRapid issuance2-4 weeks preparation (subject to regulatory approval process)Possible to issue more rapidly with delayed settlementAccelerated marketing over 1/2 to 1 dayDemands on managementLow; No investor roadshowsFlexibilityVersatile product can be