Morning Commentary: Arbor Realty, Encore Capital, CalAmp hit the market; Redfin on tap

By Abigail W. Adams

Portland, Me., July 18 – The convertibles space opened Wednesday with $480 million in new paper hitting the market and another $125 million set to price after the market close.

Arbor Realty Trust Inc. priced an upsized $130 million of three-year convertible notes after the market close on Tuesday at the cheap end of talk with a coupon of 5.25% and an initial conversion premium of 10%.

Price talk had been for a coupon of 4.75% to 5.25% and an initial conversion premium at 10% to 15%, according to a market source.

The initial size of the deal had been for $110 million.

The notes were seen trading below par early in the session. They were at 98.5 bid, 99.5 offered versus a stock price of $11.30, a market source said.

CalAmp Corp. priced $200 million of seven-year convertible notes after the market close on Tuesday at the cheap end of talk with a coupon of 2% and an initial conversion premium of 30%.

Price talk had been for a coupon of 1.5% to 2% and an initial conversion premium of 30% to 35%.

The notes were seen at 99.75 bid, 100.25 offered early in the session. CalAmp stock was down between 10 cents and 40 cents early Wednesday.

Encore Capital Europe Finance Ltd., a subsidiary of Encore Capital Group Inc., priced $150 million of five-year exchangeable notes after the market close on Tuesday at the cheap end of talk with a coupon of 4.5% and an initial conversion premium of 25%.

Price talk had been for a coupon of 4% to 4.5% and an initial conversion premium of 25% to 30%.

Of the three deals to hit the market on Wednesday, new paper from Encore was the strongest performer in secondary trading. The 4.5% notes were seen at 101 bid, 101.5 offered early Wednesday, a market source said.

While the secondary market worked to digest the new paper entering the space, one more deal is set to price after the market close.

Redfin Corp. plans to sell $125 million of five-year convertible notes with price talk for a coupon of 1.75% to 2.25% and an initial conversion premium of 27.5% to 32.5%.

The convertible notes will price alongside a concurrent offering of 3.5 million shares of common stock.

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