Aurobindo Pharma CB uses rare premium structure

Strong expansion story allows company to fix conversion price on 25% of the deal in 12 months time; investors compensated by high yield and high bond floor.

One of India's top-five pharmaceutical companies, Aurobindo Pharma last Friday April 21 sold a two-tranche, zero-coupon, five-year convertible bond to raise $200 million, which it intends to use primarily for overseas investments and acquisitions.

The bonds saw the Indian issuer opt for a typically high conversion premium on the larger of the two tranches, while the smaller tranche upped the stakes for investors somewhat as the conversion price wonÆt be fixed for another year.

Because of the greater certainty, investors...

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