Morning Commentary: New Exelon equity units edge up on debut; other new paper weaker

By Rebecca Melvin

New York, June 12 – A fresh batch of new issues in the U.S. convertibles secondary market on Thursday slipped below par in the early going with the exception of Exelon Corp.’s new 6.5% equity units, which were seen 51.25 to 51.5 with the underlying shares of the Chicago-based utility down about 2%, market sources said.

Exelon priced $1 billion of the units at the tight end and beyond the tight end of talk together with a secondary offering of common stock.

The common stock came at a slight discount to the market close Wednesday when the deals were priced. The new shares were priced at $35.00, and the market close on the common was $37.75.

Three other deals that priced late Wednesday or overnight were seen around par or slightly lower.

j2 Global Inc.’s newly priced 3.25% convertibles due 2029 traded at 99.5 with the underlying shares at $47.45, a Connecticut-based trader said.

Ariad Pharmaceuticals Inc.’s newly priced 3.625% convertibles were seen as low as 98.375 bid and as high as 100.5 offered. One trader quoted a market at 98.375 bid, 99.375 offered. A second trader said the new notes were trading at 99.5 bid, 100 offered with the underlying shares of the Cambridge, Mass.-based oncology company down 5%.

TCP Capital Corp.’s newly priced 5.25% convertibles due 2019 were not actively traded, a syndicate source said. A second market source said the new TCP paper was being offered below par.

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