By Rebecca Melvin
New York, May 13 - KfW Bankengruppe priced €3 billion of five-year bonds, exchangeable into ordinary shares of Deutsche Telekom AG, to yield 3.25% with an initial conversion premium of 27.5% over the volume weighted average price of Deutsche Telekom shares during the bookbuilding period, according to a company release.
There is a €300 million greenshoe.
The bonds were sold via a syndicate of banks led by Goldman Sachs International and Morgan Stanley Bank AG near the rich end of talk for the coupon, which was 2.875% to 3.375%, and at the midpoint of talk for the premium.
The bonds are exchangeable after one year, and are callable after three years subject to a 130% trigger. The new issue offers dividend protection above a 5% yield threshold.
In the event of an all-share Deutsche Telekom takeover, the new shares will be substituted into the exchange property. In the event of an all-cash offer, the cash will constitute the exchange property and will accrue interest at the EONIA rate.
"Demand for high quality credit in combination with a very liquid underlying allowed us to print the biggest exchangeable bond brought to the market in 2008 so far," KfW treasurer Frank Czichowski said in a news release.
The issuance was made in connection with the ongoing privatization of Deutsche Telekom, and the amounts raised are part of KfW's announced funding program for 2008, which is expected to amount to about €70 billion.
KfW and the German government currently hold a stake of 16.9% and 14.8%, respectively, in Deutsche Telekom.
The Regulation S bonds are expected to be listed on the regulated market of the Frankfurt Stock Exchange.
| Issuer: | KfW Bankengruppe
|
| Issue: | Exchangeable bonds
|
| Underlying stock: | Deutsche Telekom AG
|
| Amount: | €3 billion
|
| Greenshoe: | €300 million
|
| Maturity: | June 27, 2013
|
| Joint bookrunners: | Goldman Sachs International and Morgan Stanley Bank AG
|
| Coupon: | 3.25%
|
| Conversion premium: | 27.5% of VWAP
|
| Conversion price: | €14.9341
|
| Call: | Non-callable for three years
|
| Takeover protection: | Yes
|
| Dividend protection: | Yes
|
| Distribution: | Regulation S
|
| Price talk: | 2.875%-3.375%, up 25%-30%
|
| Rating: | Moody's: Aaa
|
| Standard & Poor's: AAA
|
| Fitch: AAA
|
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