Morning Commentary: Three deals launch in convertibles primary; Cobalt trades below 70

By Rebecca Melvin

New York, Nov. 17 – Three new deals launched in the U.S. convertibles market early Monday, including two mandatory convertibles in the form of tangible equity units and a small $75 million issue of five-year senior notes seen pricing after the market close.

The Woodlands, Texas-based homebuilder LGI Homes Inc. plans to price $75 million of five-year convertible notes to yield 3.75% to 4.25% with an initial conversion premium of 30% to 35%.

Also launching was Kindred Healthcare Inc., which plans to price $150 million of mandatory convertibles, or 1.5 million tangible equity units at $100.00 each, after the market close Tuesday, and William Lyon Homes, which plans to price $100 million of mandatory convertibles, or 1 million tangible equity units at $100.00 each, after the market close Wednesday.

The William Lyons deal was talked to yield 7% to 7.5% with an initial conversion premium 17.5% to 22.5%.

Back in established issues. Cobalt International Energy Inc.’s 2.625% convertibles changed hands at 69.427, which was up 0.25 point on the day, according to Trace data, but still depressed since the oil shocks in September and October.

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