Morning Commentary: Oil States to price; First Majestic hits market; new paper active

By Abigail W. Adams

Portland, Me., Jan. 25 – The primary market has been busy bringing new paper into the convertibles space with conditions ripe for new issuance, market sources said.

Oil States International, Inc. plans to price $200 million in five-year convertible notes after the market close with price talk for a coupon of 1.5% to 2% and an initial conversion premium of 32.5% to 37.5%.

The jury’s still out on how the deal looks with close attention being paid to the company’s credit “post forma” its recent acquisition of GEODynamics, Inc., a market source said.

The underwriters are using a credit spread of 350 basis points and a volatility of 33.7%, a market source said. “I think the volatility is a little aggressive,” the source commented.

Proceeds from the convertible notes are being used to pay down debt under the Houston-based oilfield services company’s revolving credit facility, which was drawn on to fund the acquisition of GEODynamics.

First Majestic Silver Corp. priced $150 million in five-year convertible notes prior to the market open on Thursday with a coupon of 1.875% and an initial conversion premium of 35%.

Pricing came within talk for a coupon of 1.75% to 2.25% and an initial conversion premium of 32.5% to 37.5%. The notes were trading at 100.5 early in the session with First Majestic stock down 2.54%.

Insmed Inc. and Teekay Corp.’s recently priced convertible notes continued to be active their second full day on the market.

Insmed’s 1.75% convertible notes due 2025 were wrapped around 101 early in Thursday’s session, a market source said.

Insmed stock was up in early trading Thursday to $28.475, an increase of 1.52%.

Teekay’s recently priced 5% convertible notes due 2023 were also trading around 101. Teekay stock was down early Thursday to $9.1801, a decrease of 1.29%.

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