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Morning Commentary: Sibanye Gold bringing new issue; Meritor in the works; Teva trades again
By Stephanie N. Rotondo
Seattle, Sept. 19 – The convertible bond market remained muted early Tuesday – “It’s as generic as it gets,” one trader said – as investors waited for the new issue pipeline to start flowing.
Sibanye Gold Ltd. added a deal to the primary calendar early in the day, a $450 million offering of convertible senior unsecured notes due 2023.
Price talk is for a 1.625% to 2.375% yield and an initial conversion premium of 30% to 35%.
Pricing is expected later in the day.
Ahead of pricing, the company’s stock (NYSE: SBGL) was down 34.5 cents, or 6.522%, at $4.945.
Citigroup Global Markets Inc., BMO Capital Markets and RBC Capital Markets LLC are the joint global coordinators and joint bookrunners. Barclays is also participating as a bookrunner, while Mizuho International plc is acting as co-bookrunner.
The market was also still waiting for Meritor Inc.’s $300 million sale of unsecured convertible notes due 2037, a deal which was first announced on Monday.
Price talk is for a yield of 3.25% and an initial conversion premium of 60%.
Meritor’s equity (NYSE: MTOR) was doing well prior to the deal’s pricing, rising $1.4233, or 5.8452%, to $25.7733.
BNP Paribas Securities Corp., BofA Merrill Lynch, J.P. Morgan Securities LLC, RBC and PNC Capital Markets LLC are the joint bookrunners of the Rule 144A deal.
In the secondary space, Teva Pharmaceutical Industries Ltd.’s 0.25% convertible notes due 2026 were again on the radar, though they were slightly lower, according to a market source.
The source placed the issue just north of 90.
The underlying shares (NYSE: TEVA) were meantime up over 1% at mid-morning on news the company had secured debt covenant amendments on its U.S. dollar and Japanese yen term loan and revolving credit facilities.
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