Morning Commentary: New Macquarie Infrastructure gains in early trade with shares lower

By Rebecca Melvin

New York, July 10 – Macquarie Infrastructure Co. LLC’s newly priced 2.875% convertibles were bid higher in the early going Thursday after the New York-based basic infrastructure services company priced an upsized $305 million of the five-year senior notes at the tight end of revised talk.

The Macquarie bonds were seen at 104.125 or 104.25 bid, 104.625 or 104.75 offered with the underlying shares at $66.80. Shares were down about 1% in the early going.

The new bonds “started out lower, but bid right up,” a New York-based trader said.

The deal, which saw significant outright demand, modeled rich at about 99.3 at the tight end of revised talk and using a credit spread of 200 basis points over Libor and 18% vol. versus Wednesday’s closing share price, a syndicate source said.

But market players pulled in their credit spreads after S&P came out with a BBB- rating on the deal, a Connecticut-based analyst said.

Then spread probably pulled in to more like 100 bps over Libor to 150 bps over Libor and that made it “fair around 103 as they came,” the analyst said.

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