Morning Commentary: Resource Capital eyed after new issue prices; Sutherland notes trade on NYSE

By Stephanie N. Rotondo

Seattle, Aug. 11 – More new issues were in the convertible bond market on Friday, including an offering of 4.5% convertible senior notes due 2022 from Resource Capital Corp.

The deal priced late Thursday, with $110 million of the notes being sold and another $22.161 million issued in exchange for the company’s older convertible issues. The company had said that it planned to use proceeds from the deal to repurchase a portion of its 6% convertible notes due 2018 and its 8% convertible notes due 2020, though neither issue is callable prior to maturity.

In early Friday dealings, a trader saw the 8% notes at 108 and the 6% notes at 102.875.

“Both issues crossed at those prices; the company bought [them] back,” he said.

As for the company’s stock (NYSE: RSO), it was on the weaker side, slipping 19 cents, or 1.78%, to $10.46.

Credit Suisse Securities (USA) LLC is the bookrunner.

Conversions will be settled in cash, stock or both, at the company’s option.

The notes are convertible at any time prior to maturity and putable upon a fundamental change.

The bonds are non-callable for life.

Meanwhile, Sutherland Asset Management Corp.’s $115 million of 7% $25-par notes due 2023 were admitted to the New York Stock Exchange on Friday.

The ticker symbol is “SLDA.”

A trader saw the convertible baby bonds trading at $25.70 at mid-morning.

The company priced $100 million of the notes on Aug. 4 with an initial conversion premium of 13%. On Aug. 9, the company said its $15 million over-allotment option had been exercised, bringing the total amount outstanding to $115 million.

Price talk was for a 6.75% to 7% yield and a 13% conversion premium.

Keefe Bruyette & Woods Inc. and JMP Securities LLC are the joint bookrunners.

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