Morning Commentary: New MercadoLibre expands more than 3 points; Palo Alto, Scorpio Tankers up

By Rebecca Melvin

New York, June 25 – U.S. convertibles welcomed three new deals to the market early Wednesday, all of which expanded on a hedged basis in secondary dealings.

MercadoLibre Inc.’s newly priced 2.25% convertibles due 2019 traded up to as high as 103.5 bid, 104.5 offered versus an underlying share price of $90.25 and expanded on a dollar-neutral, or hedged, basis, by as much as 3.25 points after the Latin American e-commerce company priced $300 million of the senior notes at the tight end of talk, market sources said.

The new MercadoLibre bonds were later quoted at 103 bid, 103.5 offered with the underlying shares at about $90.22, which was down 1.6%.

Palo Alto Networks Inc.’s newly priced $500 million of 0% five-year convertibles traded up to as high as 100.75 bid, 101 offered versus a share price of $78.55 early Wednesday and expanded on a dollar-neutral basis after the network security company priced $500 million of the senior notes at the rich end of talk late Tuesday.

The new Palo Alto 0% bonds were seen to have expanded about 0.75 point on a dollar-neutral basis, a trader said.

Scorpio Tankers Inc.’s new 2.375% convertibles due 2019 were up at 103.625 bid, 104.125 offered versus an underlying share price of $9.65 and also expanded on a dollar-neutral basis after the Monaco-based tanker concern priced an upsized $300 million of the senior notes at the midpoint of talk.

The Scorpio Tankers deal was initially talked at $250 million in size.

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