Planned Arbor Realty, CalAmp and Encore Capital deals eyed as fair to slightly cheap

By Rebecca Melvin

New York, July 17 – Convertibles players were eyeing three deals expected to price after the market close on Tuesday, while secondary market trading back in established issues was generally light and weighed by weakness in the technology equity space, sources said.

Arbor Realty Trust Inc. joined the deal calendar early in the session with a $110 million offering of three-year convertibles expected to price after the market close.

The Uniondale, N.Y.-based real estate investment trust and national direct lender was last in the market just two weeks ago with a similar deal, and price talk on the new deal is the same as the last one.

Proceeds of the new paper will be used to exchange the company’s existing 5.375% convertible notes due 2020 for cash and stock. Those Arbor Realty 2020 notes jumped on the new issue news and were seen last at about 120 from about 114.5 previously, according to Trace data.

The new Arbor deal joined two other issues expected to price after the market close on Tuesday, including CalAmp Corp.’s planned $200 million of seven-year convertible senior notes, and Encore Capital Group Inc.’s planned $150 million of exchangeable notes due 2023.

Using the midpoint of price talk of 1.75% coupon and 32.5% initial conversion premium, the CalAmp deal was seen about 0.625 point cheap, according to a New York-based market source.

Encore, which was talked at a 4% to 4.5% coupon and 25% to 30% premium, was also seen as slightly cheap.

“They are all fairish to a little cheap,” the market source said of the new deals.

Back in the secondary market, there was no clear-cut direction in convertibles. But given the move in technology equities, which moved to the downside, “if you had to choose, it is a little bit heavy from a convertibles standpoint,” the source said.

Equity-sensitive Intel Corp.’s 3.25% convertibles due 2039 traded down to 247.50 on Tuesday from 250.9 on Monday, with the underlying equity of the chip giant closing down 0.5% to $51.75.

DISH Network Corp.’s 3.375% convertible due 2026 were down to 91.50 to 91.625 from 92 to 94 previously, against a 3% drop to $31.78 in the underlying shares of the Englewood, Colo.-based satellite TV provider.

No further deals were heard to be announced immediately after the market close on Tuesday, but there is a deal on tap for Wednesday, namely Redfin Corp.’s planned $125 million of five-year convertible senior notes and concurrent common stock offering.

“Volume has been ticking up,” a New York-based syndicate source said regarding new issuance. “I expect it will continue through August.”

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