Posco pushes the boundaries

A daring deal from one of Asia''s strongest companies, as Posco prices Asia''s first samurai exchangeable.

Lead managers Deutsche Bank and Merrill Lynch successfully priced a Y52 billion $440 million exchangeable for Korean steel company Posco on Tuesday. The deal was something of an exercise in showmanship with Posco demonstrating its enduring appeal to international investors.

The deal sees Posco issue the five-year bonds, which are exchangeable into 15.5 million ADS of SK Telecom. The shares represent 2.5% of the total outstanding shares in SK Telecom and roughly one third of Posco's stake in the company. The bonds were priced at 100.5% thereby giving them effectively a negative yield, being repaid at par at maturity. They carry no coupon.

Most startling about the deal is that the...

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