Powerchip prices CB

One week investors have to contend with the prospect of negative yields; the next they come up against the novel concept of negative conversion premiums.

Lehman Brothers completed a $90 million convertible for Taiwanese DRAM manufacturer Powerchip yesterday Thursday with books closed after just one hour of marketing. At this point the deal was roughly five times oversubscribed as investors flocked back into the idea that DRAM prices are finally recovering.

However, the deal had a very unusual structure based on the fact there was not a single credit bid in the market. Back in December when Powerchip last tapped the convertible market via Nomura, the lead was only been able to find asset swap demand for a quarter of its $90 million deal. This appears to have eaten up any remaining credit lines in Taiwan, where banks...

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