Morning Commentary: Air Transport’s new convertibles break above par; IAC deal on deck

By Stephanie N. Rotondo

Seattle, Sept. 26 – Convertible bond players were shuffling around Air Transport Services Group Inc.’s new $225 million of 1.125% convertible notes due 2024 early Tuesday.

At mid-morning, a trader said the paper was trading all the way up to 103.25. Another market source saw the issue at 101.5.

As for the underlying stock (Nasdaq: ATSG), it was up 48 cents, or 2.03%, at $24.11.

The deal priced late Tuesday, coming upsized from an expected $200 million and with an initial conversion premium of 35%.

Initial price talk was for a 1.25% to 1.75% yield and a conversion premium of 32.5% to 37.5%.

Goldman Sachs & Co. and SunTrust Robinson Humphrey Inc. ran the books.

Meanwhile, the market was also looking to see how IAC/InterActiveCorp.’s proposed $400 million offering of convertible notes due 2022 would price.

Price talk is 1% to 1.5%, a market source reported early Tuesday. The initial conversion premium is expected to be between 27.5% and 32.5%.

The deal was first announced after Monday’s close. Pricing is expected after Tuesday’s close.

J.P. Morgan Securities LLC, Goldman Sachs & Co., BMO Capital Markets, Guggenheim and BofA Merrill Lynch are the bookrunners.

Ahead of pricing, IAC/InterActiveCorp.’s shares (Nasdaq: IAC) were down 92 cents at $113.77.

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