capitaland-issues-large-cb-in-tough-market

CapitaLand issues large CB in tough market

At an implied volatility of about 22% the pricing of the convertible is generous, but market sources question whether the bonds have been fully placed.
February 03, 2008
CapitaLand returned to the market last Thursday with another convertible bond, raising S$1.3 billion $920 million for debt repayments and new investments. The move surprised most market participants since both the equity and credit markets remain jittery and most other companies are choosing to hold off on new issues for the time being û unless they are in desperate need of cash.

The latter is definitely not true of CapitaLand, which had more than S$3 billion of cash on its balance sheet before this transaction. To go for this size in these market conditions was also viewed as unnecessarily bold, and the real estate developer paid the price as the terms were a...
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