Abstract
Encore Capital (Encore) has received a proposal for an issue of convertible bonds to Qualified Institutional Buyers (QIBs). Simultaneously, with the issuance of the convertible bond, Encore would purchase a ‘bond hedge’ in the over-the-counter equity derivatives market and sell warrants. The bond hedge and warrants sale constituted the ‘call spread overlay’. Concurrent with the transaction, Encore would also repurchase shares worth $25 million from the proceeds of the convertible bond issue. The security provides an opportunity to discuss the design of an innovative financial security in response to market and issuer requirements.
Additional Information
| Product Type | Case |
|---|---|
| Reference No. | F&A0550 |
| Title | Encore: Convertible Bond with Call Spread Overlay |
| Pages | 12 |
| Published on | May 16, 2020 |
| Authors | Sinha, Sidharth; |
| Area | Finance and Accounting (F&A) |
| Discipline | Finance |
| Access | For All |
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