Calyon launches fund-convertible bond

Calyon has issued €50 million of a new convertible bond based on shares in an equity fund, the first of its kind.

The bond is based on shares in the Schroders ISF Euro Equity Fund, a Luxembourg-based euro-denominated equity fund launched in September 1998.

Charles de la Rochefoucauld, executive director in charge of institutional and corporate sales in Calyon's equity and fund derivatives division in Paris, who structured the product, commented: "This product matches many convertible investors' appetite for diversification and return," and added that the product was aimed at asset managers, pension funds and other investors who already use convertible products.

The bond has a 1% annual coupon and a five-year maturity, with a 20% conversion premium.

Although no more launches have been scheduled yet, de la Rochefoucauld said that he expected more fund convertibles to be launched this year - if not by Calyon, then by rival banks.