Convertibles muted as week kicks off; Ares Capital bringing five-year paper; Cascadian on tap

By Stephanie N. Rotondo

Seattle, Jan. 23 – A trader said 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 couple of new issues added to the calendar.

Early in the day, Ares Capital Corp. announced a $250 million offering of convertible notes due Feb. 1, 2022.

Pricing was expected after Monday’s close but wasn’t seen as of press time.

The company’s stock was up 3 cents in the wake of the news, trading at $16.85.

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.

Both S&P Global Ratings and Fitch Ratings gave the new Ares paper a “BBB” rating. The agencies also agreed that the deal would be leverage neutral.

Meanwhile, Cascadian Therapeutics Inc. said late in the session that it was offering series E convertible preferred stock.

Cowen & Co. and Barclays are leading the deal.

The offering is being done concurrently with a common stock sale.

Cascadian’s shares slipped 2 cents to $3.65 ahead of the announcement.

Chesapeake trends upward

Chesapeake Energy Corp.’s convertible preferreds were posting sizable gains on Friday, after the company said Friday that it was reinstating dividends on that paper.

The 4.5% cumulative convertible preferreds (NYSE: CHKPrD) improved $11.70, or 20.97%, to $67.50. The 5% cumulative convertible preferreds (OTCBB: CHKDG) rose $8.44, or 14.54%, to $66.50.

The underlying equity slipped a penny to $6.68, albeit in below-average trading volume.

Holders of the 4.5%, 5%, 5.75% and 5.75% (series A) convertible preferreds will receive four quarterly payments of dividends in arrears on Feb. 15, Chesapeake said in a press release.

The total amount per share for the four quarters will be $4.50 for the 4.5% preferreds, $5.00 for the 5% preferreds, $57.50 for the 5.75% preferreds and $57.50 for the 5.75% (series A) preferreds.

The board also declared dividends on each series for the current quarter. Holders of the 5%, 5.75% and 5.75% (series A) preferreds will receive current quarterly dividends on Feb. 15. Holders of the 4.5% preferreds as of March 1 will receive current quarterly dividends on March 15.

The amount of the current dividend per share is $1.125 for the 4.5% preferreds, $1.25 for the 5% preferreds, $14.375 for the 5.75% preferreds and $14.375 for the 5.75% (series A) preferreds.

Chesapeake Energy is an Oklahoma City-based oil and gas producer.

Mentioned in this article:

Ares Capital Corp. Nasdaq: ARCC

Cascadian Therapeutics Inc. Nasdaq: CASC

Chesapeake Energy Corp. NYSE: CHK

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