Chesapeake Energy eyed in wake of tender offer news; AMD trades up; primary calendar builds

By Stephanie N. Rotondo

Seattle, Dec. 6 – Chesapeake Energy Corp.’s convertible bonds traded busily on Tuesday after the Oklahoma City-based oil and gas producer announced a tender offer.

The cash tender offer includes 10 series of notes and two series of convertible issues – the 2.5% contingent convertible senior notes due 2037 and the 2.25% contingent convertible senior notes due 2038.

In response, the company’s 5.5% convertible notes due 2026 were initially seen unchanged to slightly better, though they ended about 2 to 3 points better.

At the end of the day, the convertibles were pegged at 113.5 bid, 114 offered.

Earlier in the session, one market source placed the issue at 112.375, calling that steady day over day. Another source echoed that level, but deemed the debt up a point outright.

As for the convertible bonds included in the tender, both were trading near par, though amid limited volume.

The underlying equity traded up a dime, or 1.34%, to $7.58.

Meanwhile, Advanced Micro Devices Inc.’s 2.125% convertible notes due 2026 were on the rise, as rumors circulated that the Sunnyvale, Calif.-based company and Intel Corp. had inked a deal to use AMD’s Radeon graphics technology.

Additionally, the company announced it had inked a three-year partnership deal with Mentor Graphics Inc. to offer additional options for embedded developers.

The agreement is part of AMD’s plan to gain market share in the embedded space.

The convertibles rose as much as 5.5 points in early dealings, trading at 132.5, according to a market source. The paper eventually ended at 136.25, a gain of over 9 points.

The stock was up 77 cents, or 8.87%, at $9.45.

Calendar getting heavy

The primary market was looking forward to new deals from Zillow Group Inc. and Teradyne Inc. on Tuesday.

Though both deals were expected to price at Tuesday’s close, details were not available as of press time.

Market sources had not seen any gray markets in either issue during the day’s session.

On top of those offerings, Ensco plc announced plans to sell $650 million of exchangeable senior notes due 2024 late in the day.

Zillow said Monday that it was selling $400 million of convertible senior notes due 2021. Initial price talk was for yield of 2.25% to 2.75% with a conversion premium of 35% to 40%, but that was later revised to 2% to 2.25%, up 40%.

The stock did well ahead of pricing, as the market reacted well to the news of the offering.

Proceeds from the deal will be used to repurchase 2.75% convertible senior notes due 2020 and for other potential growth opportunities.

The equity rose $2.63, or 7.56%, to $37.40.

Meanwhile, Teradyne also announced on Monday a $400 million offering of senior convertible notes due 2023, with price talk for a yield of 1.25% to 1.75% and a premium of 22.5% to 27.5%.

The equity rose 70 cents, or 2.88%, to $24.97.

The company plans to use the proceeds to repurchase up to $80 million in common stock.

As for Ensco’s deal, it was being talked to yield 2.75% to 3% with a premium of 32.5% to 35%.

The offering comes on the heels of an exchange offer for three series of notes.

“Glad to see some action on the new issue front,” said one market source.

Mentioned in this article:

Advanced Micro Devices Inc. Nasdaq: AMD

Chesapeake Energy Corp. NYSE: CHK

Ensco plc NYSE: ESV

Teradyne Inc. NYSE: TER

Zillow Group Inc. Nasdaq: Z

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