Essar Energy prices largest CB so far this year

Essar Energy priced its five-year convertible bond at the investor-friendly end of guidance late on Tuesday evening Hong Kong time and, while there was quite a bit of scepticism in the market about the level of demand at that price, the bonds held above par during Asian trading yesterday.

However, the London-listed company with interests in India’s power, oil and gas sectors, wasn’t able to exercise the $100 million upsize option and the deal size was left at $500 million. The overallotment option, which can be used until January 28, was also reduced to $50 million from $75 million.

This brought the total amount of CB issuance by Asia-based companies on Tuesday to $1.1 billion – which is impressive for the third week in January. To have three deals in the market on the same night also sets a pretty interesting benchmark for the weeks ahead. According to bankers, there is talk of at least another two or three Asian deals in the works.

Notably, none of the three deals were plain vanilla either, indicating that issuers are open to suggestions of how to make their offerings more attractive to investors. Taiwanese LED chip manufacturer Epistar Corp’s $280 million deal came with asset swaps – a feature that is again becoming common on Taiwan CBs and which enables investors to hedge the credit.