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Morning Commentary: Primary sees deal flow of $3.15 billion; Becton prices; Black & Decker on tap
By Stephanie N. Rotondo
Seattle, May 11 – The convertible bond primary market was showing no signs of letting up early Thursday.
For the week thus far, $3.15 billion of new convertible issues have priced. That includes a $250 million sale of 3% five-year convertible notes from Dermira Inc. that priced late Wednesday and Becton, Dickinson & Co.’s $2.25 billion issue of 6.125% series A mandatory convertible preferred stock.
The latter deal came Thursday morning, with an initial conversion premium of 20%. The terms were in the middle of the 6% to 6.5% yield talk, as well as the 17.5% to 22.5% premium talk.
One trader said the Becton deal “did very well.”
He placed the convertible preferreds in a $51.85 to $52 context versus a stock price of $183.70.
“On a $50-par [issue], that is a nice initial move,” he said, adding that the paper was up half a point on swap.
“Both outrights and hedged investors are very happy,” he said.
But the pipeline wasn’t done flowing just yet, as Stanley Black & Decker Inc. said it was selling $650 million of equity units.
The equity units will hold a three-year forward stock purchase contract, as well as a share of 0% series C convertible perpetual preferred stock.
Price talk on the $100-par units is for a yield of 5.5% to 6% with an initial conversion premium of 15% to 20%.
Pricing is expected after Thursday’s close.
Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Goldman Sachs & Co. and Wells Fargo Securities LLC are running the books.
Ahead of pricing, Stanley’s stock (NYSE: SWK) was off $2.71, or 1.95%, at $136.37.
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