Morning Commentary: New LinkedIn gains after pricing at the cheap end; Molycorp looks lower

By Rebecca Melvin

New York, Nov. 6 – LinkedIn Corp.’s newly priced 0.5% convertibles due 2019 opened higher on Thursday after the Mountain View, Calif.-based business-oriented social networking service priced $1.15 billion of the five-year senior notes at the cheap end and beyond the cheap end of initial talk.

The new LinkedIn bonds were seen 102.25 bid at the open with the stock at $221.25, according to a syndicate source.

At late morning, the new LinkedIn convertibles were seen at 102.25 bid, 102.75 offered with the shares at $225.00, according to a New York-based trader.

That was better on swap by about 1.5 points to 1.75 points, the trader said. “They did come in a little bit” from the open.

LinkedIn accounted for the lion’s share of trading action. Although there was a little bit of topping off of allocations in related names like Twitter Inc. and Red Hat Inc. Those names were a little better as well, after coming in in the last couple of sessions, the trader said.

Pricing of the LinkedIn deal came at the cheap end of 0% to 0.5% coupon talk and at the cheap end of 35% to 40% talk for the premium. Premium talk was revised down during marketing from 40% to 45%.

“We’re seeing some valuation push-back on large deals such as this one, which was over $1 billion in size,” the syndicate source said. “Pricing came below the low end of the range for the premium, but it you look at the terms they are still within the existing context, and the message is that the market is still open for large transactions.”

LinkedIn shares were trading up in the early going after a drop on Wednesday.

Elsewhere, Molycorp Inc.’s convertibles were in focus, but not seen to have traded after the Greenwood Village, Colo.-based miner of rare earths minerals reported a much wider quarterly loss amid a toxic mix of lower rare-earth metals pricing, lower volume and higher costs.

Molycorp shares were down. The Molycorp 5.5% convertibles due 2018 and 6% convertibles due 2017 were last seen in the 30s, and the older Molycorp 3.25% convertibles due 2015 were last seen near 50.

A trader said he would put the Molycorp convertibles lower.

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