Date

3 March 2010
4 October 2010
                                                                                                  

Course Outline

This workshop will be of interest to executives of companies wishing to raise money and who are considering either an IPO or a rights issue. It will also appeal to auditors and accountants who need a better understanding of the world of convertible bonds.

This workshop will show how convertibles are priced on issue using credit spreads and market volatility. It will also show what happens to the bond after it has been issued.

Course Content:

Convertible bonds and other hybrid instruments
Introduction to hybrid instruments
Convertibles, Mandatory Convertibles, Exchangeable Bonds, Preferred Shares, Elks, Decs, Percs etc.
The difference between a straight bond and a warrant and a convertible bond
Dual currency convertibles

Convertible bonds in detail
Convertible = a bond + a warrant?
Zero coupon bonds
Call and put options
The credit spread
The special risks of convertible bonds

The Issuer: What type of issuer issues convertible bonds?
Examining the European Convertible Bond market by type of issuer including
    • Size of a typical convertible issue.
    • Credit rating of a typical convertible
    • Issuers by sector and country
    • Choices of maturity
    • Types of hard and soft call features in convertibles
Examining the European Convertible Market in Bloomberg
    • Who makes prices in the secondary market
    • Market depth and bid/offer spreads
What embedded features can be put in a convertible?
Tax implications of issuing convertible bonds
Considering the alternatives for issuers including
    • Straight debt
    • Swapped fixed rate bonds
    • Bank loans
    • Equity issues
What happens to a convertible after it has been issued
    • The fixed income component
    • The asset swap/credit spread
    • The call warrant

What are the measures of value for convertibles?
Conversion value and Conversion premium
The concept of payback and cash payback
YTM – yield to maturity, YTC – yield to call and YTW – yield to worst
Investment premium: Expected maturity, computing it and using it.
Comparing returns on equity and convertible bonds

Pricing methodologies for convertible bonds
The interest rate tree
The stock price tree: risk neutral valuation
Two factor models
How to model credit spreads
Understanding and using the Bloomberg function OVCV

IN ADDITION TO THE PUBLIC DATES ABOVE, THIS COURSE CAN ALSO BE TAILORED TO YOUR REQUIREMENTS AND DELIVERED IN-HOUSE FOR YOU.

PLEASE CIRCULATE THIS PDF AMONG YOUR COLLEAGUES!

IF YOU HAVE ANY QUESTIONS ABOUT THIS SEMINAR PLEASE WRITE TO US AT post@redcliffetraining.co.uk

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