Morning Commentary: Qihoo notes edge up after tranches price mostly at the mids; Web.com expands

By Rebecca Melvin

New York, Aug. 1 – Qihoo 360 Technology Co. Ltd.’s newly priced convertible senior notes, including the shorter-dated 0.5% notes due 2020 and the longer-dated 1.75% notes due 2021, edged up in trading action early Friday after the China-based PC and mobile internet security products company priced $900 million in two deals mostly at the midpoint of talk. Only the premium for the seven-year notes came at the cheap end.

Both Qihoo tranches were quoted at 100.25 bid, 100.625 offered versus an underlying share price of $91.15.

Qihoo shares were trading mostly lower and were last down $1.05, or 1.2%, at $90.10.

Elsewhere, Web.com Group Inc.’s 1% convertible notes due 2018, which priced a year ago, plunged more than 10 points on an outright basis, but improved on a dollar-neutral, or hedged, basis, after the Jacksonville, Fla.-based global domain name register reported quarterly results that missed revenue estimates. Shares were down 24%.

The Web.com bonds were quoted at 91.875 bid, 92.875 offered with the shares at $20.10 and were said to have expanded on a hedged basis by 0.5 point.

The bonds were previously 104ish.

Web.com took a similar hit at the end of June on news that Google is entering the domain registration business with an invitation only beta website.

On June 24, the bonds fell about 13 points to 103.5 bid, 104.5 offered with the shares down about 20% at $27.00.

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