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Mad as a midsummer banker

Bertrand Collomb

Around this time of year bankers are struck by a strange affliction. Maybe they're bored - summer markets are notoriously quiet - or perhaps they reckon most people will be on vacation and won't notice. Whatever the reason, there's a marked increase in silly deals. Two recent issues have left observers scratching their heads.

What's particularly baffling is that bankers are skating on thin ice in one of the safest areas of the market - convertibles.

In June, French cement company Lafarge came to market with a e1.5 billion convertible bond. Lead managers Schroder Salomon Smith Barney and Société Générale did it as a bought deal with a conversion price of e130.

By the afternoon of the same day, the banks realized that the deal probably wouldn't get done at that level. However, under French rules, a fixed-term bond cannot be repriced.

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