In May, Siemens successfully placed E2.5bn of convertible bonds. The bond was priced at a 1.375% coupon and a premium of 46% and is convertible into 44.5 million shares of Siemens AG.
The bond was noted for a special feature that will prevent dilution of Siemens’ earnings per share. The bond is the first with a contingent conversion structure to be issued in Europe, which allows the company to enter all proceedsas borrowings.
The issue stimulated strong demand and was placed with a broad range of institutional investors. The bond has a maturity of seven years and cannot be called for the first four years of the life of the security, callable thereafter subject to a 130% provisional call.
Siemens surprised the market, issuing the bond to benefit from the attractive financing opportunity available in the convertible market given a low interest rate and high volatility environment. The transaction was launched and priced within six hours.
