Taiwan's largest DRAM manufacturer completes its debut convertible as prices for 128Mbit chips fall to an all-time low. Bankers comment that books closed two times oversubscribed after a roughly one week roadshow that took in Hong Kong, San Francisco, Los Angeles, Boston and New York. Because the deal was priced one day early, a presentation in London was cancelled.
Bankers argue that a roadshow was necessary to draw in pure equity investors.
Two large anchor orders accounted for nearly the whole equity component of the book. The company also opted for a relatively short call feature and annual puts to fit its expectations about the DRAM cycle. Whereas investors wanted the security of a short put in case the cycle fails to turn by the end of the year, the company wanted a short call in a belief that it will have definitely turned by the end of two. Investors, however, wanted a bit more security. It also forsook the recent trend towards two-year puttable deals because of a spike in secondary market yields.