Blue chips are ripe for conversion
“We are even marking down the convertible Eurobond for Kepco, the South Korean electricity utility, as a sell which I never imagined we would have to do,” says one banker as he contemplates the havoc wrought by the currency and stock market crash in the Asia-Pacific region.
The region’s convertible bond market is one of the main casualties. In fact equity prices have fallen so far that, according to Hamish Bullough, head of convertible sales at Salomon Brothers, “most existing convertibles are trading as straight bonds because the equity conversion element has become effectively valueless”.
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