Morning Commentary: TiVo’s new convertibles look about fair value; older TiVo ‘comes in’

By Rebecca Melvin

New York, Sept. 16 – TiVo Inc.’s planned offering of $200 million of seven-year convertible senior notes looked about fair value to market players early Tuesday, sources said.

The new TiVo deal, launched late Monday, was expected to price after the market close Tuesday.

Using a credit spread of 350 basis points over Libor and 20% volatility, the new deal looked worth 100.20 at the midpoint of talk, according to a Connecticut-based trader.

A second trader saw the deal looking fair value or better, using a credit spread of 300 bps over Libor and 27% vol. at the midpoint of talk.

The new TiVo convertibles were talked at a 1.75% to 2.25% coupon and a 30% to 35% initial conversion premium.

The older TiVo 4% convertibles due 2016 were seen lower in trade. “The olds are in 1.5 points,” the Connecticut-based trader said.

Also pricing after the market close is Alcoa Inc.’s $1.25 billion offering of three-year mandatory convertible preferred shares.

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