Deutsche Telekom’s convert triggers surprise share slip

Issuer: Deutsche Telekom
Size: e2.3 billion mandatory convertible
Bookrunners: Goldman Sachs, Morgan Stanley

Deutsche Telekom’s mandatory convertible looked like a great idea. The company had long been criticized for not tackling its e64 billion debt pile sufficiently quickly or effectively. The convertible was a chance of doing something positive and on a large scale.

Unfortunately, while the e2.3 billion deal, the largest-ever mandatory convertible in Europe and the US, was a big step in the right direction in fixing the balance sheet, it also had a deleterious impact on the share price.