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Ares Capital’s new deal straddles par; Liberty firms; Horizon Global, Virtus deals coming up
By Stephanie N. Rotondo
Seattle, Jan. 25 – A convertible bond trader said there was less activity in Ares Capital Corp.’s new $350 million issue of 3.75% convertible notes due 2022 in early midweek dealings, after topping the charts on Tuesday.
Additionally, he said the paper had come in a bit, trading in a 99.875 to 100.25 context.
The underlying stock was up 3 cents at $17.01.
The deal came Tuesday with a 15% initial conversion premium. Pricing overall was at the cheap end of the 3.25% to 3.75% yield talk, with a conversion premium of 15% to 20%.
J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, BMO Capital Markets and Goldman Sachs & Co. ran the books.
The notes are convertible at a rate of 51.5756 shares per each $1,000 of notes, equal to $19.39 per share.
Proceeds will be used to repay debt.
Meanwhile, Liberty Media Corp.’s 1% cash-convertible notes due 2023 were slightly better intraday, according to a trader.
The trader saw the convertibles at 103.6, which compared to levels around 102.75 to 102.875 earlier in the day.
The underlying series C stock was up 53 cents, or 1.83%, at $29.42.
Liberty sold $400 million of the notes on Friday. On the following Tuesday, the company said its $50 million greenshoe had been fully exercised, bringing the total amount outstanding to $450 million.
The size was increased from an originally announced $350 million, and the terms came at the rich end of talk for a yield of 1% to 1.5% and an initial conversion premium of 27.5% to 32.5%.
The greenshoe was reduced from $52.5 million.
Looking ahead, Horizon Global Corp. is expected to price a $100 million offering of convertible senior notes due 2022 after the close on Thursday.
A trader commented that the company’s equity was trading below the $20.00 mark on Wednesday, marking the first time the stock has been under that threshold since August.
The shares were off $2.02, or 9.67%, at $18.86.
Price talk on the convertibles sale is for a 2.75% to 3.25% yield and an initial conversion premium of 27.5% to 32.5%.
JPMorgan, Wells Fargo Securities LLC, BofA Merrill Lynch and BMO Capital Markets are running the books.
Also in the pipeline was a deal from Virtus Investment Partners Inc. The company said late Wednesday that it was selling $100 million of series D mandatory convertible preferred stock.
The dividend is talked at 7% to 7.5%, with an initial conversion premium of 17.5% to 22.5%.
Barclays, JPMorgan, BofA Merrill Lynch and Morgan Stanley & Co. LLC are the joint bookrunners.
Shares of the company’s common stock were up 65 cents at $125.65.
Mentioned in this article:
Ares Capital Corp. Nasdaq: ARCC
Horizon Global Corp. NYSE: HZN
Liberty Media Corp. Nasdaq: LMCK
Virtus Investment Partners Inc. Nasdaq: VRTS
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