IAC’s 0.875% exchangeable notes dominate trading, top par; Western Asset joins calendar

By Stephanie N. Rotondo

Seattle, Sept. 27 – The new issue market continued to be all the rage in the convertible bond market on Wednesday.

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,” 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 was also firming up, adding $2.38, or 2.07%, to close at $117.23.

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

The deal was 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.

After the close, Western Asset Mortgage Capital Corp. announced a $100 million offering of convertible senior notes due 2022 via JMP Securities.

Price talk is for a 6.25% to 6.75% yield, with an initial conversion premium of 10% to 15%, according to a market source.

The convertible issue will be Western Asset’s first debt issue.

As of Wednesday’s close, the company’s stock was trading at $10.93, up a nickel.

The notes are contingently convertible prior to July 1, 2022.

The company can redeem the issue on or after July 1, 2022.

Proceeds will be used to acquire agency CMBS, residential whole and bridge loans, mezzanine commercial loans and non-agency RMBS representing interests in pools of reperforming loans.

Mentioned in this article:

IAC/InterActiveCorp. Nasdaq: IAC

Western Asset Mortgage Capital Corp. NYSE: WMC

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