Controversy surrounds HDFC deal

Debut bank CB from India causes storm of criticism.

In what is a reflection of the ultra-competitive nature of the Asian convertible bond business, controversy erupted on Friday over HDFC's $500 million debut CB issue.

Competitor banks were quick to criticize the deal and question the lead managers' announcement that the issue was two times subscribed. They pointed out that the deal had to be reoffered at 98.5 - which meant the four lead managers had lost around $2.5 million on the trade. They also asserted that a large portion of the deal was rumoured to be sitting on the four banks' proprietary trading desks. Surely, they asked, if the deal was two times covered, there would be no...

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