The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.

All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.

Wells Fargo takes the convertible trail

How do you entice a highly rated, well-respected and conservative issuer to use a product they've never used before? You offer them a whole new investor base willing to buy a security that bags the issuer savings of 40 basis points over Libor.   That's what Wells Fargo managed last month when it issued its first convertible in at least 25 years.

For most of that stretch it was in good company. Convertibles weren't used by investment-grade corporates. Bank loans and corporate bonds offered better funding costs.

That all changed in 2000. New structures made convertibles more attractive. And then the deteriorating economy gave the nascent high-grade converts market a shove by limiting access to commercial paper. High-grade companies could issue a convert structured in such a way that they would pay neither coupon nor yield - zero-zero convertibles - while at the same time having high conversion premiums that at times went beyond 40%. It was essentially free money; some companies, such as Novellus, even invested the proceeds in US treasuries.

Several asset-management companies took advantage of this in 2001 but Wells Fargo stayed away despite solicitous investment banks. "We've had them knocking on our door for three years trying to get us to do a deal," says the company's treasurer, Nino Fanlo.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree