Midday Commentary: Vipshop active; ModusLink quiet after pricing on the cheaps; Carriage in focus

By Rebecca Melvin

New York, March 13 - Vipshop Holdings Ltd.'s new 1.5% convertibles continued to trade actively on Thursday after putting in an OK debut on Wednesday. The bonds were up a point at 104.8 in the early going Thursday, according to Trace data, when shares were higher. But shares recently dipped into negative territory.

On Wednesday when the upsized $550 million of Vipshop bonds debuted, the price rose to 104, in line with shares, and were flat on a dollar-neutral basis.

Vipshop is a Guangzhou, China-based online discount retailer.

Also early Thursday, ModusLink Global Solutions Inc.'s new 5.25% convertibles were not heard in trade after the Waltham, Mass.-based supply chain company priced an upsized $90 million of the five-year senior notes at the cheap end of talked terms. ModusLink shares tanked and were seen last down 69 cents, or 14%, at $4.20.

Meanwhile, the Carriage Services Inc. deal for $120 million of seven-year convertible bonds, which was seen pricing after the market close Thursday, looked fair to slightly cheap at the midpoint of talked terms, sources said.

Using a credit spread of 600 basis points over Libor and a 34% vol., a Connecticut-based trader got the deal worth 101.2 at the midpoint of talk, which was for a 3% coupon and a 30% initial conversion premium.

A second source said that he got the deal fair value using a 600 bps credit spread and 30% vol. But he thought the deal merited higher vol. of 34%.

Carriage Services shares were down $1.33, or 7%, at $17.34 in the early going.

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