Annaly Capital to price $500 million five-year convertibles to yield 3.5%-4%, up 20%-25%

By Rebecca Melvin

New York, Feb. 8 - Annaly Capital Management Inc. planned to price $500 million of five-year convertibles before the market open Tuesday that were talked to yield 3.5% to 4% with an initial conversion premium of 20% to 25%, according to a market source.

There is a $75 million, or 15%, over-allotment option for the registered offering.

Credit Suisse Securities (USA) LLC is the underwriter.

The unsecured senior notes will be mandatorily converted if the daily volume-weighted average price of the shares exceeds 130% of the conversion price for 10 of 15 consecutive trading days, subject to a coupon make-whole.

There is dividend protection.

Proceeds are expected to be used to purchase mortgage-backed securities for the company's investment portfolio and for general corporate purposes.

Annaly Capital Management is a real estate investment trust based in New York that owns and manages a portfolio of mortgage-backed securities.

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