Morning Commentary: Convertibles quiet; Energy & Exploration launches pre-IPO deal

By Rebecca Melvin

New York, June 23 – U.S. convertibles were quiet early Monday to start out the first official week of summer with major equity indices trading fractionally lower.

“There’s nothing going on. It’s very dull,” a New York-based trader said.

In the primary market, Fort Worth, Texas-based Energy & Exploration Partners Inc. launched an offering of $375 million of five-year convertible subordinated notes in an offering that comes prior to its initial public offering of common shares.

The company had attempted an IPO previously in 2012 but had pulled the deal, a New York-based source noted.

A pre-IPO convertible is rare but not unheard of. “It probably appeals to a different group of investors and is generally a play on their IPO. It converts at a slight discount to the IPO valuation rather than to the current stock price. It can be advantageous from the corporate financing perspective,” the New York-based source said.

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