MoGen Inc.

In 2006, Merrill Lynch was the lead bookrunner for a $ 5 billion bond for MoGen, Inc., which was the single largest bond issue in history. Merrill Lynch Equity Derivatives Group needed to convince management of the MoGen best coupon and conversion premium for MoGen and potential investors in the output. The students this pricing decision must understand the concept of a convertible bond rating as the sum of a straight bond plus the conversion option. V. .. Read more »

In 2006, Merrill Lynch was the lead bookrunner for a $ 5 billion bond for MoGen, Inc., which was the single largest bond issue in history. Merrill Lynch Equity Derivatives Group needed to convince management of the MoGen best coupon and conversion premium for MoGen and potential investors in the output. The students this pricing decision must understand the concept of a convertible bond rating as the sum of a straight bond plus the conversion option. The appreciation of the conversion option as a call option requires the estimation of the Black-Scholes model, the volatility is a particular challenge input. The case is for students who already have a basic knowledge of the working bond valuation and option pricing principles and well-designed public with undergraduate, MBA and executive education. The teacher may choose to teach the case in a lesson or two.
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from
Kenneth Eades,
Alex Holsenbeck
Source: Darden School of Business
15 pages.
Release Date: 14 October 2008. Prod #: UV1054-PDF-ENG
MoGen, Inc. HBR case solution