Morning Commentary: Convertibles muted as week kicks off; Ares Capital bringing five-year paper

By Stephanie N. Rotondo

Seattle, Jan. 23 – A trader said early Monday that “somebody forgot to turn on the convertibles market today.”

As of mid-morning, only $81 million of bonds had traded overall, the trader noted.

While there was limited liquidity, the space did see a new issue added to the calendar, a $250 million offering of convertible notes due Feb. 1, 2022 from Ares Capital Corp.

Pricing was expected after Monday’s close.

The company’s stock (Nasdaq: ARCC) was up 9 cents in the wake of the news.

The deal is being talked with a 3.25% to 3.75% coupon and an initial conversion premium of 15% to 20%.

J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC are running the Rule 144A deal.

The issue will be non-callable for life.

Proceeds will be used to repay certain outstanding debt.

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