Morning Commentary: Aegean deal comes upsized, at middle of talk; Iconix trades at new highs

By Stephanie N. Rotondo

Seattle, Dec. 14 – The convertible bond primary market got another new issue to play with on Wednesday, as Aegean Marine Petroleum Network Inc. brought $150 million of 4.25% convertible notes due 2021 at par with a 22.5% initial conversion premium.

The deal was upsized from $100 million and came in the mid-range of talk for a yield of 4% to 4.5% and a conversion premium of 20% to 25%.

Jefferies ran the books.

A trader said the new issue was “performing quite well” in a range of par to 100.5, even though the “stock was off $1 and change.”

The trader also noted that the deal was attractive, considering the high coupon.

“That’s a hard coupon to get these days,” he said.

Conversions will be settled with cash, common stock or a combination thereof, at the company’s option. The conversion rate is 66.9120 shares per each $1,000 of notes, equal to $14.95 per share.

The paper is non-callable for three years and becomes provisionally callable if the stock hits a 130% price hurdle.

Away from new issues, Iconix Brand Group Inc.’s 1.5% convertible notes due 2018 were seen at 93 in early midweek trading.

“That’s a new high since they collapsed,” a trader said, noting that the paper had been in the 60s in the spring.

He said he had encouraged accounts to get involved when the bonds were at the lower levels, trading with a 16% to 17% yield to maturity. Now 15 months ahead of the due date, the bonds are yielding closer to 7.5%, he said.

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