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Handbook of Corporate Equity Derivatives and Equity Capital Markets

Book Description

Equity strategies are closely guarded secrets and as such, there is very little written about how investors and corporate can utilise equity vehicles as part of their growth strategies. In this much-needed book, industry expert Juan Ramiraz guides readers through the whole range of equity derivative instruments, showing how they can be applied to a range of equity capital market situations, including hedging, yield enhancement and disposal of strategic stakes, mergers and acquisitions, stock options plan hedging, equity financings, share buybacks and other transactions on treasury shares, bank regulatory capital arbitrage and tax driven situations. The book includes case studies to highlight how equity derivative strategies have been used in real-life situations.

Table of Contents

  1. Cover
  2. Series
  3. Title Page
  4. Copyright
  5. Dedication
  6. Preface
  7. About the Author
  8. 1: Main Strategic Equity Derivative Instruments
    1. 1.1 EQUITY FORWARDS
    2. 1.2 EQUITY SWAPS
    3. 1.3 STOCK LENDING AND BORROWING
    4. 1.4 CALL AND PUT OPTIONS
    5. 1.5 Dividend Swaps
    6. 1.6 VARIANCE SWAPS AND VOLATILITY SWAPS
  9. 2: Equity Capital Markets Products
    1. 2.1 MAIN EQUITY CAPITAL MARKETS PRODUCTS
    2. 2.2 INITIAL PUBLIC OFFERINGS
    3. 2.3 CASE STUDY: GOOGLE'S DUTCH AUCTION IPO
    4. 2.4 RIGHTS ISSUES (OR RIGHTS OFFERINGS)
    5. 2.5 RIGHTS ISSUES OF CONVERTIBLE BONDS
    6. 2.6 ACCELERATED BOOK-BUILDINGS
    7. 2.7 AT THE MARKET OFFERINGS
  10. 3: Convertible Bonds and Mandatory Convertible Bonds
    1. 3.1 INTRODUCTION TO CONVERTIBLE BONDS
    2. 3.2 WHO BUYS CONVERTIBLE BONDS?
    3. 3.3 CONVERTIBLE BONDS: THE ISSUER PERSPECTIVE
    4. 3.4 CASE STUDY: INFINEON'S CONVERTIBLE BOND
    5. 3.5 DELTA SHARE REPURCHASE STRATEGY
    6. 3.6 MANDATORY CONVERTIBLE BONDS
    7. 3.7 RATIONALE FOR ISSUING MANDATORY CONVERTIBLES
    8. 3.8 RATIONALE FOR INVESTING IN MANDATORY CONVERTIBLES
    9. 3.9 FIXED PARITY MANDATORY CONVERTIBLES
    10. 3.10 VARIABLE PARITY MANDATORY CONVERTIBLES
    11. 3.11 DIVIDEND ENHANCED CONVERTIBLE SECURITIES
    12. 3.12 CASE STUDY: UBS's DECS
    13. 3.13 SPECIAL CLAUSES IN CONVERTIBLES
    14. 3.14 CONTINGENT CONVERTIBLES: FRESHES, CASHES AND ECNS
  11. 4: Strategic Equity Transactions around Convertible/Exchangeable Bonds
    1. 4.1 ISSUING AN EXCHANGEABLE WITH A THIRD-PARTY GUARANTEE
    2. 4.2 ISSUING A CONVERTIBLE THROUGH A THIRD PARTY
    3. 4.3 CRYSTALLIZING A GAIN IN A CONVERTIBLE INVESTMENT THROUGH WARRANTS
    4. 4.4 MONETIZING A STAKE WITH AN EXCHANGEABLE PLUS A PUT
    5. 4.5 INCREASING LIKELIHOOD OF CONVERSION WITH A CALL SPREAD
    6. 4.6 DECREASING LIKELIHOOD OF CONVERSION WITH A CALL SPREAD
    7. 4.7 DOUBLE ISSUANCE OF EXCHANGEABLE BONDS
    8. 4.8 BUYING BACK CONVERSION RIGHTS
    9. 4.9 BUYING BACK CONVERTIBLE/EXCHANGEABLE BONDS
    10. 4.10 PRE-IPO CONVERTIBLE BONDS
  12. 5: Hedging and Yield Enhancing Strategic Stakes
    1. 5.1 HEDGING A STRATEGIC STAKE
    2. 5.2 YIELD ENHANCEMENT OF A STRATEGIC STAKE
  13. 6: Disposal of Strategic Stakes
    1. 6.1 MOST COMMON DISPOSAL STRATEGIES
    2. 6.2 DETERMINISTIC DISPOSAL STRATEGIES
    3. 6.3 ENHANCED DISPOSAL STRATEGIES
    4. 6.4 DERECOGNITION STRATEGIES
    5. 6.5 COMBINATION OF ABB AND A CALL OPTION/EXCHANGEABLE
  14. 7: Strategic Equity Derivatives in Mergers and Acquisitions
    1. 7.1 KEEPING VOTING RIGHTS IN PROXY CONTESTS
    2. 7.2 SUBMITTING RESOLUTIONS TO AN AGM
    3. 7.3 INCREASING LIKELIHOOD OF SUCCESS OF A MERGER ARBITRAGE POSITION
    4. 7.4 AVOIDING MANDATORY OFFER RULES
    5. 7.5 INCREASING LIKELIHOOD OF SUCCESS OF A TAKEOVER
  15. 8: Stock Options Plans Hedging
    1. 8.1 MAIN EQUITY-BASED COMPENSATION PLANS
    2. 8.2 IFRS ACCOUNTING FOR EQUITY-BASED COMPENSATION PLANS
    3. 8.3 CASE STUDY: ABC'S ESOP AND SAR
    4. 8.4 MAIN ESOP/SAR HEDGING STRATEGIES
    5. 8.5 HSBC'S PERFORMANCE SHARE PLAN
  16. 9: Equity Financings
    1. 9.1 CASE STUDY: EQUITY COLLATERALIZED BOND
    2. 9.2 SALE + EQUITY SWAP
    3. 9.3 PREPAID FORWARD + EQUITY SWAP + PLEDGE
    4. 9.4 REPO FINANCING
    5. 9.5 STOCK LOAN FINANCING
    6. 9.6 PUT FINANCING
    7. 9.7 COLLARED FINANCING
    8. 9.8 REVOLVING MARGIN LOAN FACILITIES
  17. 10: Share Buybacks and Other Transactions on Treasury Shares
    1. 10.1 OPEN MARKET REPURCHASE PROGRAMS
    2. 10.2 ACCELERATED REPURCHASE PROGRAMS
    3. 10.3 VWAP-LINKED REPURCHASE PROGRAMS
    4. 10.4 PREPAID COLLARED REPURCHASE PROGRAMS
    5. 10.5 DEEP-IN-THE-MONEY CALL PURCHASE
    6. 10.6 ASIAN CALL PURCHASE
    7. 10.7 PUBLICLY OFFERED REPURCHASE PROGRAMS
    8. 10.8 PUBLIC OFFER OF PUT OPTIONS
    9. 10.9 PRIVATE SALE OF A PUT OPTION
    10. 10.10 ACQUISITION OF SHARES WITH A RANGE ACCRUAL
    11. 10.11 OTHER TRANSACTIONS ON TREASURY SHARES
  18. 11: Bank Regulatory Capital
    1. 11.1 AN OVERVIEW OF BASEL III
    2. 11.2 TIER 1 CAPITAL
    3. 11.3 TIER 2 CAPITAL
    4. 11.4 DEDUCTIONS FROM COMMON EQUITY TIER 1 CAPITAL
    5. 11.5 OTHER CAPITAL BUFFERS
    6. 11.6 TRANSITIONAL ARRANGEMENTS
    7. 11.7 LEVERAGE RATIO
    8. 11.8 LIQUIDITY COVERAGE RATIO
    9. 11.9 NET STABLE FUNDING RATIO
    10. 11.10 CASE STUDY: CALCULATION OF MINORITY INTERESTS
    11. 11.11 CASE STUDY: CREATING MINORITY INTERESTS
    12. 11.12 CASE STUDY: REDUCING RISK WEIGHTING
    13. 11.13 CASE STUDY: RELEASING COMMON EQUITY
    14. 11.14 CASE STUDY: REDUCING AN UNCONSOLIDATED FINANCIAL STAKE
    15. 11.15 CASE STUDY: COMMERZBANK'S CAPITAL STRUCTURE ENHANCEMENT WITH CREDIT SUISSE
  19. Bibliography
  20. Index