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Midday Commentary: Four deals pricing after the close; YY looks cheap, Emerald Oil slightly rich
By Rebecca Melvin
New York, March 18 - There were four deals in the convertibles market early Tuesday with pricing pegged for after the market close.
YY Inc.'s $400 million offering of five-year convertible senior notes was looking notably appealing, according to a Connecticut-based trader, who said the Guangzhou, China-based social media company's deal valued up at 103 at the midpoint of talk, using a credit spread of 700 basis points over Libor, 40%, vol. and a 1% stock borrow.
Pricing of the YY offering is stronger at a 1.75% to 2.25% coupon and a 35% to 40% initial conversion premium than the deal this company launched and canceled back in November.
A second source said that he had a good feeling about Navistar International Corp.'s $350 million of five-year convertible senior notes that were seen pricing at a coupon of 4.25% to 4.75% and a premium of 57.5% to 62.5%.
The Emerald Oil Inc. deal for $125 million five-year convertible senior notes was seen as slightly rich using a credit spread of 650 bps over Libor and 35% vol., according to one source. But using a 40% vol. and the same spread, the deal was seen fair value, a second source said.
The fourth deal in the market was Gramercy Property Trust Inc.'s $100 million of five-year senior notes that were being priced by an operating subsidiary and exchangeable into shares of Gramercy Property Trust. That deal was talked at a 3.5% to 4% coupon and a 17.5% to 22.5% initial conversion premium. There were no initial comments on this deal by the New York-based commercial real estate investment company and asset management business.
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