Morning Commentary: IAC’s new 0.875% exchangeable notes dominate trading, move above par

By Stephanie N. Rotondo

Seattle, Sept. 27 – IAC/InterActiveCorp.’s $450 million of 0.875% exchangeable senior notes due 2022 – a deal priced ahead of Wednesday’s open – was “better than half the volume” at mid-morning, according to one New York-based sellside source.

He saw the bonds trading up to a 104.5 to 104.875 context on the break.

The company’s underlying equity (Nadaq: IAC) was also firming up, adding 85 cents to trade at $115.70.

IAC FinanceCo Inc. was the actual issuer of the deal, though proceeds will be lent to IAC/InterActiveCorp. to redeem its 4.875% senior notes due 2018.

The deal was also upsized from an expected $400 million. The yield came tighter than the 1% to 1.5% initial price talk, while the 32.5% initial conversion premium came at the rich end of the 27.5% to 32.5% talk.

J.P. Morgan Securities LLC, Goldman Sachs & Co., BMO Capital Markets, Guggenheim and BofA Merrill Lynch are the bookrunners.

The initial conversion rate is 6.5713 shares per each $1,000 of notes, equal to an initial conversion price of $152.18.

The exchangeable notes are redeemable upon certain corporate events. Holders can also put the notes upon a fundamental change.

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