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SCORECARD - Winning Converts

Ailing banks get relief from convertibles.

CITIGROUP'S $7.5 BILLION SALE OF CONVERTIBLE bonds last month to the Abu Dhabi Investment Authority, a deal that helped the bank boost its finances amid credit market turmoil, highlights the rising popularity of convertibles. The first nine months of 2007 saw $67 billion issued, up 46 percent from the same period last year, according to Dealogic. For the 12 months ended November 14, banks earned $2.98 billion in fees from convertibles deals, up 38 percent from the prior 12 months. Convertibles are bonds that become stock if the issuer’s share price reaches a preset level. For investors they’re a conservative way to bet on stocks rising; for issuers they offer lower interest costs than straight bonds. That makes convertibles popular toward the end of stock rallies and amid rising debt capital costs — much like today’s prevailing market conditions. The charts above show which firms are getting the biggest shares of the surge in convertibles fees.