Morning Commentary: DISH deal comes upsized; NextEra sells equity units; Cobalt still in play

By Stephanie N. Rotondo

Seattle, Aug. 3 – Two new convertible issues were priced early Wednesday, giving investors something to focus on.

DISH Network Corp. brought $2.5 billion of 3.375% convertible notes due 2026.

The notes carry a 32.5% conversion premium, which was in line with the 30% to 35% talk.

A trader said the deal – which came upsized from $2 billion– was “all the volume.”

“That’s what happens when you get a new issue of this size, it just dominates the action,” he said.

The trader pegged the issue with a 103 handle post-pricing. The stock (Nasdaq: DISH), which had declined on Tuesday after the deal was first announced, was also heading for higher ground.

The stock was up $1.46, or 3.09%, at mid-morning, trading at $50.65.

NextEra Energy Inc. also came with a deal, pricing $1.5 billion of 6.123% mandatory convertible equity units.

The units were priced at $48.875 apiece but have a par value of $50.00. A trader said that upon pricing, the units moved back up to the par level.

The equity (NYSE: NEE) was also ticking up, adding 19 cents to $127.82.

Each unit will consist of a contract to purchase NextEra Energy common stock and a 5% beneficial ownership interest in a NextEra Energy Capital Holdings Inc. debenture due Sept. 1, 2021. The debentures will be guaranteed by the parent company.

Each stock contract is based on a per share price range of $127.63 to $159.54. At the higher end, the price represents a 25% premium over Tuesday’s closing share price.

Away from the new issues, a trader said Cobalt International Energy Inc.’s 2.625% convertible notes due 2019 were “still trading” but were looking to regain lost territory.

The bonds had fallen on Tuesday in response to bad news out about the oil and gas company. Come Wednesday, paper was up about 1.5 points, the trader said, trading around “38 and change.”

“Prints were all over the place yesterday,” he said. Wednesday’s gains were “not unexpected, they went down a lot.”

The stock underlying the debt (NYSE: CIE) was also making a comeback, rising 7.1 cents, or 6.23%, to $1.05.

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