Orix $350 million (proceeds) quick-sale convertible talked at 4.25-4.75% yield, up 45%

By Ronda Fears

Nashville, Tenn., May 28 - As the market anticipated, primary activity picked up sharply after the long Memorial Day weekend with Orix Corp. launching a quick-sale deal and two other deals launched for later this week. So far, the week's calendar shapes up to nearly $1 billion of new paper.

Orix's $350 million in proceeds of zero-coupon convertible senior notes are talked to yield 4.25% to 4.75% with a 45% initial conversion premium. Merrill Lynch & Co. is sole lead manager of the Rule 144A deal.

"There is some currency risk, and the stock doesn't trade much in the U.S.," said a convertible trader at a hedge fund in New York.

"The yield looks pretty decent, but most of this will probably get placed overseas."

The issue is convertible into Tokyo-based insurance and financial services firm's local shares on the Tokyo exchange or ADRs.

There did appear to be some interest in U.S. buyers, however, according to another market source. The ADRs closed down $1.30 to $42 in the U.S. with heavy volume of 35,700 versus the average volume of 1,772 in the shares.

The convert will be non-callable for five years, with put options in years five, 10 and 15.

There is a $50 million (proceeds) greenshoe available.

Also, there is a contingent conversion trigger of 110%.

The issue is not rated, but Orix's senior debt is rated Baa3 by Moody's and BBB by S&P.

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