Taiwan Glass taps hedge funds with $100m CB

Maker of skyscraper windows sells convertible bond to redeem a previous out-of-the-money trade.
Taiwan Glass specialises in glazing modern commercial buildings
Taiwan Glass specialises in glazing modern commercial buildings

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 helped that Taiwan Glass offered some differentiation from the usual...

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