Morning Commentary: Limelight convertibles skyrocket on debut; LendingTree active

By Abigail W. Adams

Portland, Me., July 23 – New paper was in focus in the secondary space on Thursday after the convertibles primary market squeaked out an overnight deal.

Limelight Networks Inc. priced an upsized $110 million of five-year convertible notes after the market close on Wednesday.

The notes were priced to move, a source said, and move they did.

The 3.5% notes skyrocketed on an outright and dollar-neutral basis on their secondary market debut.

Meanwhile, LendingTree Inc.’s 0.5% convertible notes due 2025 remained active with the notes continuing to post gains their second day in the secondary space.

Limelight upsizes

Limelight priced an upsized $110 million of five-year convertible notes after the market close on Wednesday at the cheap end of talk with a coupon of 3.5% and an initial conversion premium of 27.5%.

Price talk was for a coupon of 3% to 3.5% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

The offering was marketed with assumptions of 800 basis points over Libor and a 40% vol., which looked 8.625 points cheap at the midpoint of talk, a source said.

While the deal was small, the notes were active and making large gains on an outright and dollar-neutral basis early Thursday.

The 3.5% notes traded up to 103.5 on an outright basis as stock sank more than 6%, a market source said.

The bonds saw about $17 million in reported volume a little over one hour into Thursday’s session.

Limelight stock traded down to $6.26, a decrease of 6.43%, shortly before 11 a.m. ET.

LendingTree day two

LendingTree’s 0.5% convertible notes due 2025 were active and continuing to post gains their second day in the secondary space.

The 0.5% notes were changing hands around 104.375 with stock down early in the session, a market source said.

The notes remained active with about $18 million in reported volume a little over one hour after the opening bell.

LendingTree stock traded down to $348.22 before bouncing off its lows and trading up to $355.78, an increase of 0.10%, shortly before 11 a.m. ET.

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