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UBS AND Morgan Stanley are preparing to launch one of the largest ever dollar convertible deals from a Spanish issuer in a $550m to $680m offering of bonds from Telefonica de Espana, the country's telecom giant which was privatised earlier this year.
Although no terms have been set, the market is expecting the five year bonds to offer investors a coupon of between 3% and 3-1/4% with a conversion premium of between 20% and 22% and hard call protection for the first three years.
Even with a double-A rating these terms are widely seen as tight, putting the bonds on a theoretical value of around 95, 96.
The Telefonica deal is expected to reach the markets in the next three weeks and the announcement of its arrival follows a fierce battle between firms desperate to win the top role of lead manager.
Competition to secure convertible mandates is intensifying as the market continues to lap...