Taiwan Glass taps hedge funds with $100m CB

Taiwan Glass Industrial raised $100 million on Monday from a five-year convertible bond, even as European stocks fell 2% amid fears of a conflict between Russia and Ukraine in Crimea.

Investors pushed a hard bargain given the uncertain market conditions but the willingness of Taiwanese banks to swap out the bond portion made the deal attractive to hedge funds and were particularly important given the lack of stock available to hedge the equity piece.

The ability to hedge the credit risk basically turns a CB into a levered warrant, which means that heightened volatility only helps to make the option more valuable.

It also...