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Unrated Austrian real estate company Immofinanz’s convertible in January was the largest equity-linked issue from the sector in Europe – although it is dwarfed by recent issues from the Middle East.

It was archetypal of the motives of companies from the sector which are using convertible bonds: the proceeds were used for further investment in properties, in this case in Germany and central and eastern Europe, and the main attraction of issuance was the low cost of capital.

"We had long thought of equity-linked as an interesting method of financing and had done a small convertible a few years ago [a seven-year €150 million 4% coupon issue due in 2008] that targeted Austrian investors," says Karl Petrikovics, chief executive of the Vienna-based company. "But it was the cheap cost of funding and attractive conversion price that spurred us to do the deal in January, which targeted international investors. In addition, we liked the simplicity of convertible issuance.

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