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Midday Commentary: New Proofpoint, HCI add on hedge; GT Advanced, Endologix, SouFun shares lower
By Rebecca Melvin
New York, Dec. 6 - Proofpoint Inc.'s newly priced 1.25% convertibles traded higher on an outright and dollar-neutral, or hedged, basis on their debut in secondary market action early Friday after the Sunnyvale, Calif.-based security services vendor priced an upsized $175 million of five-year bonds at the midpoint of coupon talk and rich end of premium talk.
The Proofpoint 1.25% bonds were better by about 1.5 points dollar neutral even though they were moving a little lower in line with lower shares at late morning, a syndicate source said.
The Proofpoint deal was last at 100.5 bid, 101 offered with the shares at about $28.54. The shares were down 3%. Earlier the bonds traded in the mid to high 101s.
"The stock is a little lower now, so they are 100.5 to 101," he said.
Also making a debut in the convertibles market was HCI Group Inc.'s new deal. The HCI 3.875% convertibles were seen at 101 bid, 102 offered versus a share price of $48.05, which was the previous close, or the stock price at which the bond priced. So those bonds were up about 1.5 points dollar neutral.
The Tampa, Fla.-based property and casualty insurer priced $100 million of the five-year bonds at price points that were mixed compared to initial talk. The Rule 144A deal came at the cheap end of 3.375% to 3.875% coupon talk and at the rich end of 30% to 35% premium talk.
Otherwise, the secondary market was fairly quiet, one trader said. Most of the deals that debuted in the market on Thursday were looking a little lower in line with weaker shares, including GT Advanced Technologies Inc.'s 3% convertibles, Endologix Inc.'s 2.25% convertibles, SouFun Holdings Ltd.'s 2% convertibles and American Realty Capital Properties Inc. 3.75% convertibles.
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