New issues from Ensco, Zillow continue to trade; Rexnord’s convertible preferreds list

By Stephanie N. Rotondo

Seattle, Dec. 12 – New convertible bond issues that priced last week continued to see active trading on Monday.

Ensco plc’s $750 million issue of 3% exchangeable senior notes due 2024 – a deal priced Wednesday – “worked out pretty nice,” a trader said, seeing the paper moving up to a 114.75 to 115 context at mid-morning.

“The stock moves up; the bonds follow,” he said, placing the underlying equity at $11.55.

By the bell, the issue had settled in a little to 112.5 bid, 113 offered, according to a trader.

However, another market source placed the paper with a 114 handle, up nearly 5 points on the day.

While the common stock was up earlier in the day – the high of the session was $12.03 – it finished a penny lower at $10.99.

The company said on Monday that $99.5 million of its $112.5 million over-allotment option had been exercised, lifting the total amount outstanding to $849.5 million.

Also from Wednesday’s business, Zillow Group Inc.’s 2% convertible senior notes due 2021 “haven’t moved,” according to a trader.

The trader saw the issue trading busily at 102.5 bid, 102.75 offered, which he said was “virtually where they were when they came out.”

The underlying class C common stock declined 57 cents, or 1.53%, to $36.74. The class A common stock dropped 63 cents, or 1.71%, to $36.28.

Like Ensco, Zillow announced on Monday that its greenshoe had been exercised. Unlike Ensco, its $60 million over-allotment option was exercised in full, bringing total issuance to $460 million.

Zillow also said that it had used $370.2 million of proceeds from the offering to privately repurchase the Trulia LLC-linked 2.75% convertible notes due 2020.

From earlier in the month, Rexnord Corp.’s $350 million of 5.75% series A mandatory convertible preferred stock listed on the New York Stock Exchange on Monday.

The ticker is “RXNPA.” The $50-par deal came Dec. 2 with an initial conversion premium of 20%.

The issue finished the day at $50.50, which was down from $50.80.

Peabody firms

A trader said Peabody Energy Corp.’s 4.75% convertible junior subordinated debentures due 2066 were “way up,” a trader said, calling the paper up 3.5 points at 28 bid, 28.5 offered.

“There are prints all over the place,” the trader added.

The trader later saw the debentures pushing up to a 29 to 29.5 range.

At another desk, a trader said the debt was up 4 points outright.

“Quarterly settlement for [metallurgical] coal prices was a strong number,” the trader said.

Yet another source pegged the paper at 28.5, which was deemed up 4 to 5 points.

The bankrupt coal company’s shares were initially up 25 cents, or 2.16%, at $11.85. However, the stock ended off 28 cents, or 2.41%, at $11.32.

As of last week, met coal prices were seen up 160% for the year.

Mentioned in this article:

Ensco plc NYSE: ESV

Peabody Energy Corp. OTCBB: BTUUQ

Rexnord Corp. NYSE: RXN

Zillow Group Inc. Nasdaq: ZG/Nasdaq: Z

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