Asset swappers love KDIC deal

Underwriters slice and dice exchangeable bond for fixed-income buyers.

The blockbuster $850 million deal from government-owned Korea Deposit Insurance Corp KDIC exchangeable into shares of Korea Electric Power Corp Kepco proved a hit partly because about 20% of the deal was asset-swapped for pure fixed-income investors, according to fund managers in Hong Kong and London. Bonds can be exchanged into both Kepco domestic shares and American depositary receipts ADRs.

The deal, which fund managers believe was Asias first privatization-cum-convertible bond, was oversubscribed 10 times, although as one fund manager who bought the deal notes, Many orders were inflated. We put in a bid for 50% more than we wanted in the expectation that our competitors would do the same....

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