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Morning Commentary: Ares Capital deal tops par post-pricing; Yahoo! active, better on results
By Stephanie N. Rotondo
Seattle, Jan. 24 – Ares Capital Corp.’s new $350 million issue of 3.75% convertible notes due 2022 were dominating early trading on Tuesday, according to a trader.
As of mid-morning, trading in the Ares issue made up about $73 million of the total $167 million volume, the trader said.
The trader pegged the deal in a par to 100.125 range.
The underlying stock (Nasdaq: ARCC) edged up 3 cents to $16.89 in early dealings.
The deal came with a 15% initial conversion premium. Pricing overall was at the cheap end of the 3.25% to 3.75% yield talk, with a conversion premium of 15% to 20%.
J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, BMO Capital Markets and Goldman Sachs & Co. ran the books.
Away from the new issue, Yahoo! Inc.’s 0% convertible notes due 2018 were quite busy in the wake of better-than-expected earnings.
One trader said the convertibles were “near 102.” Another market source also placed the issue around a 102 area, which was up 1.5 to 2 points outright.
The company’s common shares (Nasdaq: YHOO) were up $1.68, or 3.97%, at $44.08.
Yahoo reported its fourth-quarter results late Monday. Additionally, the company gave an update on its Verizon merger, saying that the closing of the deal is delayed until the second quarter.
The buyout was initially expected to be wrapped up in the first quarter of 2017 but was pushed back as the Securities and Exchange Commission launched an investigation into hackings that occurred in 2013 and 2014. The SEC contends that the security breaches should have been reported to investors sooner.
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