Call Spreads & Capped Calls

The call spread bid process is not as simple as it seems and must be executed on an extremely tight timeline on the day of the deal – the bid manager has approximately 2 hours to receive and analyze bids, negotiate with the top bidders, finalize a call spread syndicate, and share the deltas with the convertible lead bookrunner. In addition, although banks are important partners in the transaction, they have significant conflicts of interest because they act as counterparties in the call spread.

As your financial advisor, ICR Capital’s Convertible and Equity Derivatives Advisory team mitigates this by sitting on your side of the table and providing transparency throughout the entire process. We will work with you to determine the right structure based on your objectives and help you think through the accounting and tax implications. We also have a proprietary database and custom-designed software that gives our clients an edge in the call spread bid and optimizes the process to help you achieve the best pricing, saving you 150bps+ of value, on average, in the call spread auction alone.

Furthermore, call spread documentation is highly technical and esoteric. Our experienced team can walk you through the provisions, fix loopholes both big and small, and de-risk the transaction for the future. We will seamlessly work together with your general counsel and your law firm to streamline the documentation process and improve various provisions and thresholds.