Midday Commentary: Post, Finisar lag on debuts; planned Yandex, E-House look cheap

By Rebecca Melvin

New York, Dec. 11 - Finisar Corp.'s newly priced 0.5% convertibles traded off slightly on their debut in the secondary market early Wednesday after the Sunnyvale, Calif.-based fiber-optic equipment maker priced an upsized $225 million of the 20-year senior notes at price points that were fixed when the deal was launched.

The new Finisar was seen 99 bid, 100 offered.

Post Holdings Inc.'s newly priced 2.5% perpetual convertible preferred shares sank after the St. Louis-based cereal maker priced $300 million of the preferreds at the cheap end of coupon talk and at the fixed 10% premium point that was talked.

The new Post was seen at 97 bid, 98 offered with shares down about 3%. Post's old 3.75% perpetual preferred, of which $241.5 million priced earlier this year in February, were still not heard in trade.

In addition to the new issues, convertible market players were focused on three new deals that launched after the market close on Tuesday for a combined $930 million in issuance.

Yandex NV's $600 million of five-year convertible bonds were looking pretty cheap. Using a credit spread of 350 basis points over Libor and a 35% vol., one Connecticut-based trader saw the deal worth 102 at the midpoint of talk. But he raised concerns related to the company's business as an internet search engine in Russia and internationally.

Likewise, E-House (China) Holdings Ltd.'s $180 million of five-year convertibles were seen as cheap, but the Beijing-based real estate services company raised red flags for the trader.

Trulia Inc.'s $150 million of seven-year convertible senior notes were seen fair value at 99.6, according to this trader, using a credit spread of 675 bps and a 35% vol. Trulia is a San Francisco-based real estate site.

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