some initial comments about it being
another equity-neutral deal, but once
investors saw who the issuer was, we
didn’t get any negatives on the trade. As it
is a clear credit, we didn’t feel the need to
pre-sound and it helped that it was in
euros [rather than US dollars] so there
were no cross-currency issues.”
He added that many investors were not
price-sensitive but that some of the larger
accounts did not move beyond 104%. At
that pricing, the book was 2.7 times
covered, with demand of almost €1.4bn.
The bond floor on pricing was 97%.
Trading in the grey market late in the
afternoon was around 105%.
Owing to the fixed pricing and the
reference price to be set in two weeks’ time,
there was less urgency in closing the book
and bankers were happy to keep it open
long enough for some US offshore investors
to take a look. There was a roughly 70%/30%
split of long-only and hedge funds in a book
of more than 100 lines.
Proceeds are for general corporate
purposes, including a €3bn buyback
programme announced in March.
Adidas shares were relatively unruffled,
closing the day down 1.8% at €207.
Citigroup was sole global coordinator and
joint bookrunner with Bank of America
Merrill Lynch, Deutsche Bank, HSBC and
UniCredit.
Adidas last issued CBs in 2012 when it
raised €500m in its first visit to the market
in nearly 10 years.JAPAN
LINE CBS TO FUND TECH INVESTMENTSJapanese messaging app company LINE raised
¥73.16bn (US$657m) from a public dual-
tranche convertible bond issue last week in
the largest Euroyen CB offering of the year.
The company doubled those proceeds by
issuing near identical five and seven-year
bonds to parent company Naver.
Line, which is listed in Tokyo and New
York, split the Reg S issue equally between
five-year and seven-year tranches.The ¥36.58bn five-year zero-coupon CB
trance was priced at a conversion premium
of 47% over the company’s closing price of
¥5,080 last Tuesday, the mid-point of an
indicative range of 42%–52%. The ¥36.58bn
of seven-year zero-coupon CBs came at the
top of an indicative conversion range of
38%–48%.
Both tranches have an issue price of 100
and an offer price of 102.5.
The bonds sold to Naver had the same
terms as the marketed CBs but an issue
price of 102.5.
The public offering attracted strong
demand, with the five-year tranche three
times covered while the seven-year was
more than two times covered. The seven-
year bonds drew more than 100 investors
while the five-year tranche had close to
100 investors. The top 10 investors took
about 50% of the paper.
Japanese issuers have been coming
to the CB market in the past few
months to raise funds for their
technology development. In late
August, financial services company SBI
Holdings sold a ¥50bn Euroyen CB issue to
fund investments in fintech, AI,
blockchain and digital asset-related
businesses.
“The positive response to the SBI CB and
a few other domestic CBs from Japanese
internet companies recently have given
confidence to other tech issuers,” said a
person close to the Line deal. “We thinkmore tech companies will consider selling
CBs as rising interest rates will raise the
cost of selling bonds.”
Line plans to use two-thirds of
the proceeds for investments in
fintech businesses and one-third for
investments in AI businesses by December
2021.
The credit spread assumption on
the five-year bonds was 80bp, with the
bond floor at 95.4 and implied volatility
at 29%. For the seven-year tranche,the
credit spread was assumed at 100bp,
with a bond floor of 91.8 and implied
volatility at 29%.International Financing Review September 8 2018^97STRUCTURED EQUITY
EQUITY-LINKED DEALS WEEK ENDING: 7/9/2018
Issuer Country Date Amount Greenshoe Tenor Coupon (%) Premium (%) Bookrunner(s)
Line Japan 4 /9/2018 ¥36.58bn 2023 0 .0000 47 .0 JPM, Morgan Stanley, Nomura, GS, Mizuho
Line Japan 4 /9/2018 ¥36.58bn 2025 0 .0000 4 8.0 JPM, Morgan Stanley, Nomura, GS, Mizuho
Adidas Germany 43347 €500m 2023 0 .0005 0 .4 Citigroup, BAML, DB, HSBC, Unicredit
Aecon Group Canada 06/09/2018 C$160.0m C$24.0m 5y 5. 0000 40 .0 TD Securities, CIBC World Markets
Line Japan 04 /09/2018 ¥36.58bn (US$285m) N/A 5y 0 .0000 47 .0 JPM, Morgan Stanley, Nomura, GS, Mizuho
Line Japan 04 /09/2018 ¥36.58bn (US$285m) N/A 7y 0 .0000 4 8.0 JPM, Morgan Stanley, Nomura, GS, Mizuho
Infinera US 06/09/2018 US$350.0m US$52.5m 6y 2. 1300 30 .0 Morgan Stanley
Perficient US 05 /09/2018 US$125.0m US$18.8m 5y 2.3800 25. 0 Jefferies, Nomura
Retrophin US 05 /09/2018 US$240.0m US$36.0m 7y 2.5000 35. 0 Jefferies, BarclaysALL INTERNATIONAL ASIAN CONVERTIBLES
(EXCLUDING JAPAN)
BOOKRUNNERS: 1/1/2018 TO DATE
Managing No of Total Share
bank or group issues US$(m) (%)
1 Goldman Sachs 2 2,136.01 27 .0
2 Credit Suisse 8 1,693.90 21. 4
3 JP Morgan 4 980 .97 12. 4
4 BNP Paribas 3 58 1.83 7 .3
5 China Merchants Secs 1 333.33 4 .2
=5 Citic 1 333.33 4 .2
7 Morgan Stanley 2 3 18.89 4 .0
8 Deutsche Bank 2 3 12.49 3.9
9 Nomura 2 2 48.49 3. 1
10 Citigroup 1 235.80 3. 0
Total 23 7 ,917.02
Including exchangeables.
Source: Thomson Reuters SDC code: M11GLOBAL CONVERTIBLE OFFERINGS
BOOKRUNNERS: 1/1/2018 TO DATE
Managing No of Total Share
bank or group issues US$(m) (%)
1 Goldman Sachs 46 9,982. 41 13.6
2 JP Morgan 48 7 ,388.67 10 .1
3 Morgan Stanley 42 6,228.65 8.5
4 BAML 32 5,191.64 7 .1
5 Citigroup 23 3,818.61 5. 2
6 Credit Suisse 20 2,890.69 3.9
7 Deutsche Bank 15 2,697.30 3. 7
8 UBS 7 2,268.82 3. 1
9 Barclays 15 2,186.55 3. 0
10 Wells Fargo 12 1,651.13 2. 2
Total 265 73,424.06
Including exchangeables.
Source: Thomson Reuters SDC code: C9ALL INTERNATIONAL US CONVERTIBLES
BOOKRUNNERS: 1/1/2018 TO DATE
Managing No of Total Share
bank or group issues US$(m) (%)
1 Goldman Sachs 31 5,106.31 16. 0
2 Morgan Stanley 31 4,734.26 14 .8
3 JP Morgan 33 4,486.37 14 .0
4 BAML 26 4,338. 01 13.6
5 Citigroup 15 2,569.35 8. 0
6 Barclays 12 1,883.30 5.9
7 Wells Fargo 12 1,651.13 5. 2
8 Deutsche Bank 7 969 .83 3. 0
9 RBC 7 958. 45 3. 0
10 Jefferies 8 84 5.87 2.6
Total 85 3 1,938.12
Source: Thomson Reuters SDC code: C9a10 Equities and SE 2250 p81-98.indd 97 07/09/2018 20:19:33