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Morning Commentary: Market awaits new deals from Hercules, Liberty; Nabors remains in focus
By Stephanie N. Rotondo
Seattle, Jan. 19 – A convertible bond trader said early Thursday that there was “no noise yet” on two new issues that are slated to price after the session’s close.
Hercules Capital Inc. said late Wednesday that it was selling $150 million of five-year convertible senior notes, with yield talked at 4.25% to 4.5% and an initial conversion premium of 12.5% to 17.5% (expected ratings: BBB-/BBB+).
Jefferies is running the Rule 144A deal.
Early Thursday, Liberty Media Corp. announced it plans to offer $350 million of cash convertible senior notes due 2023. The notes are talked with a 1% to 1.5% yield and an initial conversion premium of 27.5% to 32.5%.
Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. LLC, UBS Securities LLC and BofA Merrill Lynch are running those books.
But it wasn’t only the primary that was quiet, according to the trader. He said that at mid-morning, only $69 million convertible bonds had traded. That compared to $83 million that had traded by the same time on Wednesday.
“It’s all about Trump,” he said. “Everyone is just waiting to see” what the president-elect will do come Inauguration Day and thereafter.
In early dealings, Nabors Industries Inc.’s $575 million of 0.75% exchangeable senior unsecured notes due 2024 continued to be active, according to a trader.
The name made up about $15 million of the early volume, the trader said, seeing the paper holding around the 104 level.
The stock (NYSE: NBR) was meantime up 26 cents, or 1.5%, at $17.65.
The deal came Jan. 10 with an initial conversion premium of 40%. The company – a unit of Nabors Industries Ltd. – initially sold $500 million of the notes. A $75 million greenshoe was fully exercised on Jan. 13.
Citigroup Global Markets Inc. and Goldman Sachs & Co. were the bookrunners.
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