Role reversal
In an effort to reduce debt levels, a number of European telecom and financials companies have launched mandatory convertibles. Shareholders, for so long at the top of the pecking order, are having to adjust to the idea of bondholder value. Joanne Hart reports
In February 2003, Deutsche Telekom unleashed a tornado on the financial markets, the fallout from which is still being felt today. The company launched a €2.3 billion bond issue, maturing in 2006 and carrying a 6.38% coupon. Such a deal would under normal circumstances have caused little more than a flicker of interest. But this was no ordinary bond: it was a mandatory convertible, scourge of scores of investors and under investigation by regulators across Europe.
Between 1996 and 2000, only
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