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Morning Commentary: New convertible deals from BlackRock Capital, Liberty Expedia trade well
By Stephanie N. Rotondo
Seattle, June 8 – Convertible bond market players were focusing on two new deals that began trading early Thursday.
Late Wednesday, BlackRock Capital Investment Corp. priced a $125 million offering of 5% five-year convertible notes with an initial conversion premium of 10%.
The deal came at the cheap end of yield talk and in line with the conversion premium talk.
Come Thursday’s session, a trader saw the notes in a 100.5 to 100.75 context.
“There’s a lot of leverage in that one because of the low strike price,” the trader said.
The initial conversion price is $8.46. At mid-morning, the stock (Nasdaq: BKCC) was off about a nickel, trading around $7.65.
Morgan Stanley & Co. LLC, BofA Merrill Lynch, BMO Capital Markets, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and HSBC Securities ran the books.
Meanwhile, Liberty Expedia Holdings Inc. priced a $350 million Rule 144A offering of 1% senior debentures exchangeable for Expedia Inc. stock early Thursday.
The deal came with an initial conversion premium of 32.5%, at the rich end of talk.
A trader pegged the paper at 102 to 102.375.
As for the underlying Expedia equity (Nasdaq: EXPE), it was flipping back and forth between negative and positive in early trading.
Exchanges will be settled in Expedia stock, cash or both, at Liberty’s option. The initial conversion rate is 5.1566 shares per each $1,000 of notes, equal to an initial conversion price of $193.93.
BofA Merrill Lynch, J.P. Morgan Securities LLC and UBS Securities LLC were the joint bookrunners.
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