Morning Commentary: Primary market gets some action with new deal from Nabors Industries

By Stephanie N. Rotondo

Seattle, Jan. 10 – The convertible bond market had a new deal to play with early Tuesday, as Nabors Industries Inc. brought $500 million of 0.75% exchangeable senior unsecured notes due 2024.

The deal came at par with an initial exchange premium of 40%. Initial price talk was for a 0.75% to 1% yield, with a premium of 40%.

Citigroup Global Markets Inc. and Goldman Sachs & Co. ran the books.

The new issue was well priced, according to one sellside source, who saw the paper trading around 102 in early dealings.

“That is definitely the focus,” the trader said of the paper.

Given that the issue was performing well, the trader added that it was “slowly dragging up the rest of the market with it.”

He also opined that the deal would be well absorbed.

In the wake of the offering, the underlying equity (NYSE: NBR) dipped 7 cents to $17.90.

The exchange rate is 39.7488 shares per each $1,000 of notes, representing $25.16 per share. Exchanges will be settled with cash, common stock, or a combination thereof, at the company’s option.

Proceeds will be used to prepay the remaining balance of the subsidiary’s unsecured term loan due 2020, as well as to pay the cost of capped call transactions. Any remaining proceeds will be used for general corporate purposes, including to repay or repurchase other debt.

The company is a wholly owned subsidiary of Hamilton, Bermuda-based Nabors Industries Ltd., an oil and gas drilling contractor.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.