Midday Commentary: Herbalife prices at the cheaps, slips; Cepheid, American Energy on tap

By Rebecca Melvin

New York, Feb. 4 - Herbalife Ltd. priced $1 billion of 5.5-year convertible senior notes at par late Monday, and the new 2% notes, which priced at the cheap end of talk, slipped early Tuesday in after-market trading, market players said.

A level on the new Herbalife convertible was heard at 96.75 bid, 97.75 offered versus a share price of $67.10, according to a Connecticut-based trader.

Shares of the Cayman Islands-based nutrition and vitamin supplements company opened a little higher. They fell in subsequent action and were down more than $2.00, or about 3%, at $66.92 at mid-morning.

Also in the primary market, Cepheid was getting a look after the Sunnyvale, Calif.-based molecular diagnostics company launched a $250 million offering of seven-year convertible senior notes after the market close on Monday.

Price talk for the Cepheid deal was for a 1.5% to 2% coupon and a 27.5% to 32.5% initial conversion premium. That was seen to be bit aggressive by one New York-based sellsider, but a second source said that using a credit spread of 375 basis points over Libor and a 32% vol. got the deal 2.6% cheap in the Kynex model.

In addition, American Energy - Utica LLC, an affiliate of American Energy Partners LP, launched a $500 million offering of seven-year convertible subordinated notes that was talked at a 3% to 4% coupon and seen pricing after the market close on Feb. 20. The company is not yet publicly traded.

Elsewhere, shares of Take-Two Interactive Software Inc. slid in early action after the New York-based video game publishing company posted fiscal third-quarter results that beat estimates but guided lower for the fourth quarter.

Take-Two has two convertible issues, including a 1% convertible due 2018 and a 1.75% convertible due 2016.

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