Morning Commentary: OSI’s new deal comes ‘aggressive’; Golar, Microchip notes hold around par

By Stephanie N. Rotondo

Seattle, Feb. 16 – The convertible bond market had yet another new issue to play with on Thursday, OSI Systems Inc.’s $250 million of 1.25% convertible senior notes due 2022.

The deal priced late Wednesday, coming with a 38.5% initial conversion premium.

The terms were in the middle of the 1.125% to 1.625% yield talk and the 35% to 40% premium talk.

The issue was upsized from $225 million.

One trader remarked that the convertibles were “priced pretty aggressively,” adding that they “did not trade very well after the break.”

BofA Merrill Lynch, Wells Fargo Securities LLC, J.P. Morgan Securities LLC and Jefferies ran the books.

The conversion price is $107.46, equal to 9.3056 shares per $1,000 of notes.

On the heels of the new issue, the company’s stock (Nasdaq: OSIS) dropped 73 cents to $76.86.

Action in the new deal was meantime taking attention away from other recent issues, such as Golar LNG Ltd.’s 2.75% convertible notes due 2022, a $350 million issue priced ahead of Tuesday’s open. Trading in Microchip Technology Inc.’s $1.8 billion of 1.625% convertible notes due 2027 and $500 million of 2.25% convertible notes due 2037 – issues priced Friday – also quieted down.

However, all issues continued to trade at or above par.

Looking ahead, one sellside source speculated that the calendar could start to fill up.

“It seems like guys are raising more cash for more deals, so hopefully we’ll see more primary [activity],” he said.

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