New Macquarie Infrastructure convertible active, pops post-pricing; Intel busy, better

By Stephanie N. Rotondo

Seattle, Oct. 7 – Macquarie Infrastructure Corp.’s $350 million issue of 2% convertible notes due 2023 was taking up the bulk of the trading in the convertible bond market early Friday.

The trader said the new issue was trading outright in a 100.5 to 101.5 range.

He noted that with a 5.66% yield on the common stock, the bonds were trading at a negative yield to the equity by “almost 400 basis points.”

“But it’s debt and it [currently] has a floor and people like that,” he said.

Toward the end of the day, the paper was coming in a little bit, being quoted at par bid, 100.5 offered.

The stock meantime closed at $82.76, down 13 cents.

The deal came upsized from $325 million and with an initial conversion premium of 35%.

Price talk was for a yield of 2.25% to 2.75% and a conversion premium of 27.5% to 32.5%.

J.P. Morgan Securities LLC, Barclays, BBVA Securities Inc., Regions Securities LLC and Wells Fargo Securities LLC ran the books.

Away from Macquarie, the other big trader of the day was Intel Corp.’s 2.95% junior subordinated convertible notes due 2035.

A trader pegged the paper at 137.75 versus a stock price of $38.03 at mid-morning. He noted that about $37 million of the bonds had changed hands.

The paper eventually closed in a 138 to 139 context, as the equity inched up 3 cents to $38.10.

There was, however, no fresh news to act as a catalyst.

According to one New York-based trader, total trading volume in the convertibles space was about $286 million at mid-morning. Of that, $167 million was Macquarie.

“So over 70% of the volume is in these two issues,” he said. He added that he was not all that surprised that the new deal was topping the charts.

“There is so much demand, and supply just doesn’t come out,” he said.

Even by the bell, trading in those two issues made up over 50% of the day’s total volume.

Mentioned in this article:

Intel Corp. Nasdaq: INTC

Macquarie Infrastructure Corp. NYSE: MIC

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