Aerojet comes upsized, pushes above par; week’s other new deals in focus; LinkedIn active

By Stephanie N. Rotondo

Seattle, Dec. 9 – It continued to be all about new issues in the convertible bond market on Friday.

Aerojet Rocketdyne Holdings Inc. announced that it sold $260 million of 2.25% convertible senior notes due 2023, with a conversion premium of 36.8%.

Price talk was for a yield of 1.875% to 2.375% with an initial conversion premium of 27.5% to 32.5%. The deal was upsized from $200 million.

In early dealings, the new deal jumped to a 102.75 to 103 context, according to a trader.

“The stock was up a little bit this morning,” the trader noted.

Though that was true, by day’s end the underlying equity was off 51 cents, or 2.68%, to $18.50.

From Wednesday’s business, Ensco plc’s $750 million offering of 3% exchangeable senior notes due 2024 was “the other one that’s trading a lot,” a trader said.

He called the issue up “like 5 points” at 107.75 bid, 108.25 offered at mid-morning.

The issue neared 110 by the end of the day.

The company’s shares were also stronger, gaining 61 cents, or 5.87%, to $11.00.

As for Teradyne Inc.’s $400 million of 1.25% senior convertible notes due 2023 – another deal from Wednesday – they were seen at 105.5 bid, 106 offered.

That level was about unchanged day over day.

However, the stock declined 41 cents, or 1.56%, to $25.84.

The equity has been trending upward since the new deal came on Wednesday.

As for Zillow Group Inc.’s 2% convertible senior notes due 2021 – also from the midweek session – they were pegged at 102.5 bid, 103 offered.

The underlying class C stock dipped 12 cents to $37.31, while the common stock waned 6 cents to $36.91.

While Zillow’s new issue has done well since pricing, the equity has been weaker ever since.

LinkedIn busy, but steady

Away from new issues, LinkedIn Corp.’s 0.5% convertible notes due 2019 were “active, but there’s not actual movement,” according to a trader.

The trader saw the issue trading with a 99 handle.

LinkedIn said late Thursday that it would repurchase the notes on Dec. 28, due to a fundamental change. That fundamental change is in connection with Microsoft Corp.’s $26.2 billion acquisition of the networking company.

Upon completion of the merger – which occurred Thursday – LinkedIn also entered into a supplemental indenture amending the conversion right for the notes. Holders now have the right to convert the notes into cash in an amount equal to $665.44 per each $1,000 principal amount of notes. That amount equals the merger consideration that a holder of a number of shares of class A common stock equal to the conversion rate immediately prior to the merger would have owned or been entitled to receive.

LinkedIn is a Mountain View, Calif.-based business and employment-oriented social networking service.

Mentioned in this article:

Aerojet Rocketdyne Holdings Inc. NYSE: AJRD

Ensco plc NYSE: ESV

LinkedIn Corp. NYSE: LNKD

Teradyne Inc. NYSE: TER

Zillow Group Inc. Nasdaq: ZG/Nasdaq: Z

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