Restructure fixed coupon note
In current market condition where many FCNs are likely to be converted into shares, it may be good to restructure those FCNs by lengthing the maturity.
In the condition that:
• Customer has no intention to cut loss if converted to stock.
• Dividend yield of likely converted stock is low.
• Customer does not wish to get converted into stocks.
• Client wishes to receive few more months of coupon thereby may reduce breakeven cost (if share price stays around the same level).
• Customer is aware that best scenario is a knock out, not a capital gain.
In the condition that:
• Customer has no intention to cut loss if converted to stock.
• Dividend yield of likely converted stock is low.
• Customer does not wish to get converted into stocks.
• Client wishes to receive few more months of coupon thereby may reduce breakeven cost (if share price stays around the same level).
• Customer is aware that best scenario is a knock out, not a capital gain.
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