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Midday Commentary: Planned Energy XXI looks slightly cheap; YY deal pulled; JinkoSolar in focus
By Rebecca Melvin
New York, Nov. 18 - Energy XXI (Bermuda) Ltd. launched a $300 million offering of five-year convertible notes early Monday, while YY Inc. said that it has decided to withdraw its previously announced $250 million offering of convertible senior notes due Nov. 15, 2018.
The new deal from Energy XXI, a Hamilton, Bermuda-based oil and natural gas exploration and production company, was seen slightly cheap at the midpoint of price talk, using a credit spread of 575 basis points over Libor and a 37% vol., according to a Connecticut-based trader.
The offering was seen 0.5 point cheap at the 3% coupon, 50% premium midpoint of talk.
A second source said that he was using a 37% vol. and a 25 bps borrow cost to value the Energy XXI deal.
Meanwhile, the cancelation of YY's Rule 144A and Regulation S deal didn't come as a surprise to at least one market source.
"No, we heard it was not going well last week," the source said, adding that it might have been because the deal came too close on the heels of SINA Corp.'s $700 million offering of five-year convertible senior notes, which priced with a 1% coupon and a 45% initial conversion late last week.
It might have been because SINA launched the same day and the fact that it was also a Chinese company and the better one of the two, the source said.
Elsewhere, JinkoSolar Holding Co. Ltd. was also in focus early Monday after the Shanghai-based solar power product manufacturer reported positive results that caused the underlying shares to spike 15%.
JinkoSolar said third-quarter shipments surged 55%, exceeding estimates, and allowing the Chinese solar company to hike full-year guidance again.
Despite the share move, traders queried said they hadn't seen levels early on the JinkoSolar 4% convertibles due 2016.
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