Morning Commentary: Cowen’s new notes trade up on market debut

By Abigail W. Adams

Portland, Me., Dec. 12 – Cowen Inc.’s newly priced $120 million in five-year convertible notes with a coupon of 3% and a 25% initial conversion premium made large gains in early trades Tuesday although not many of the notes are expected to appear in the secondary market.

The 3% convertible notes due 2022 were at 102.75 bid, 103.5 offer with a stock price of $13.90, according to a market source.

There was tight allocation for the offering and not many notes are expected to trade, a market source said.

The notes priced late Monday night, according to a company release.

Cowen and Nomura Securities International Inc. are joint bookrunners for the deal, which carries a greenshoe of $15 million.

Cowen anticipates $116.4 million in proceeds from the Rule 144A deal, or $130.95 million if the greenshoe is exercised.

Proceeds will be used to repurchase $115.14 million of Cowen’s 3% cash convertible notes due 2019 and $19.5 million of class A common stock from purchasers of the notes in privately negotiated transactions, according to a company release.

Cowen’s currently has $149.5 million outstanding in the 3% cash convertible notes due 2019. The 3% notes due 2019 were trading at 102.5 early Tuesday, according to Trace data.

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