Softbank considering listing convertible bonds on WSE

For Softbank, becoming the second company to list convertible bonds on the Warsaw Stock Exchange (WSE) is an appealing prospect. The software maker and a handful of other Polish firms are expected to float publicly traded convertible bonds by year-end on the heels of ComArch's benchmark issue last April, bankers and company executives said. Public listing seems to be very attractive, said Lukasz Grochowski, Softbank's investor relations director. Plus, (listing) improves the liquidity of the security. Last week, Softbank announced its intention to raise as much as zl. 80 million ($20 million) from convertible bonds with a maturity of no more than five years, and is strongly considering listing them on the WSE. Other software and IT companies, such as Prokom and ComputerLand, have already issued convertible bonds, though they did not list them on an exchange. Bankers and issuers said that recent changes in regulations and fees associated with listing convertible bonds as well as depressed stock prices, would encourage more public listings. This, in turn, would give investment bankers more business, and investors and companies more cash-raising options.

We know that a couple of companies might be preparing to announce their intention to go ahead with a convertible issue this year, said Jaroslaw Derylo, an assistant director at CA IB Securities, which conducted the ComArch issue. He declined to reveal the names of those companies. Even though ComArch raised zl. 40 million ($10 million) and Softbank hopes to raise twice that much, Poland's convertible bond industry pales in comparison to Western Europe. France alone raised $7.1 billion in the first half of this year. But Poland's market for new security issues has slowed to such a point that any new activity would be significant, Derylo said. Convertibles are bonds that investors may exchange for a company's stock at a fixed price or time in the future. This is the sexy instrument of the day, said a London-based banker who asked not to be named. WSE executives are also eager to increase the profile of securities. Some weeks ago we had introduced some changes that made it easier (to list converts), said Lukasz Jagiello, the deputy director of listings at the WSE. He said the WSE and the National Depository for Securities (KDPW) have streamlined procedures and slashed fees for listing. And according to CA IB's Derylo, the industry has taken notice. There's an increased willingness to make concessions on fees, he said. We are talking with potential issuers, Jagiello added. We hope to have some other issuers this year. He refused to say which Polish companies were interested. Softbank said it is attracted to the WSE because it would be able to reach more potential investors, such as pension funds. Grochowski said that because Polish pension funds are only allowed to invest 5% abroad, they are constantly looking for good investment opportunities at home. Despite the added benefits of WSE listing, Softbank has chosen to issue convertible bonds because they are flexible. They are treated differently than stocks, he said. They give an issuer flexibility; to make it more like bonds or to make it more like shares according to the expectation of the purchases. - Staff report