Midday Commentary: JinkoSolar's planned $100 million convertible 'cheap'; existing JinkoSolar quiet

By Rebecca Melvin

New York, Jan. 15 - JinkoSolar Holding Co. Ltd. launched an offering of $100 million of five-year convertible notes together with 2.75 million American Depositary Shares early Wednesday. Market sources said the new convertible deal looks cheap, or attractive, for investors.

The China-based solar product manufacturer has an existing 4% convertible that priced in 2011.

The new JinkoSolar convertible was talked at a 4% coupon and a 30% initial conversion premium at the midpoint of terms. One trader said those terms made the deal 6% cheap, using a credit spread of 1,000 basis points over Libor and a 40% vol.

A second source said he heard that stock borrow was difficult in the name, therefore he didn't see the deal as cheap. Using a 1,000 bps credit spread and 45% vol. with reduced borrow made them 4.6% cheap, he said.

Using a 1,000 bps credit spread, 40% vol. and reduced borrow made them 2% cheap, he said.

The existing JinkoSolar 4% convertible was not seen in trade, but one source had a level on it of 117.75 with the underlying shares at $36.35, which was Tuesday's market close.

The Rule 144A JinkoSolar note offering has a $15 million greenshoe and was being sold via Credit Suisse Securities (USA) LLC as the bookrunner. The notes are non-callable for three years, with a put at year three.

Timing on the deal wasn't known.

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