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Morning Commentary: Planned Trina Solar deal in focus; Ford Motor drops on lowered guidance
By Rebecca Melvin
New York, Sept. 30 – Trina Solar Ltd.’s planned $100 million of five-year convertibles were in focus early Tuesday as traders valued the deal ahead of terms set to be fixed after the market close.
The Trina deal was seen about fair value using a hefty credit spread of 1,000 basis points over Libor and a 45% vol., a New York-based trader said.
Hedged players were expected to be limited by tight stock borrow even with a stock borrow facility coming in conjunction with the notes.
“A select few will have access to the special borrow facility offered by the leads,” the trader said.
Trina’s existing 3.5% convertibles were not seen in trade, a second New York-based trader said.
Shares of the Changzhou, China-based maker of solar-power products dropped 81 cents, or 6%, to $12.39 in the early going.
Elsewhere in trading at month- and quarter-end, Intel Corp.’s 3.25% convertibles due 2039 were atop the Trace volume charts amid no particular news for the chip giant. Intel shares were little changed.
The Intel 3.25% convertibles, a large $2 billion deal priced in 2009, traded down nearly 2 points at 166.5.
Meanwhile, Ford Motor Co.’s convertibles were pulled into trade at lower levels, with shares of the Dearborn, Mich.-based automaker down after lowering full-year guidance on Monday.
Ford now expects to report pretax profit this year of between $6 billion and $7 billion, which is down about $1.5 billion from what was forecast in July.
Ford’s 4.25% convertibles due 2016 fell nearly 7 points to 168.75.
Ford’s 4.25% convertibles due 2036, of which there is not much left outstanding, traded at 175.00.
Ford shares were down 32 cents, or 2%, at $14.79, extending a 7.5% drop to $15.11 on Monday.
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