Planned Cypress Semiconductor looks cheap; Weatherford exchangeable rebounds with oil

By Rebecca Melvin

New York, June 20 – Cypress Semiconductor Corp.’s planned $250 million of 5.5-year convertible senior notes looked cheap at terms that were talked before pricing was fixed, a convertibles trader said on Monday.

The deal, which was expected to price late Monday, was talked at a 4.5% to 5% coupon and a 27.5% to 32.5% initial conversion premium.

Using a credit spread of 700 basis points over Libor and 35% vol., the deal modeled more than 4 points cheap at the midpoint of talk, the trader said, and the credit spread seemed wide to begin with, he added.

Shares of the San Jose, Calif.-based semiconductor manufacturer ended the session down 44 cents, or 4%, at $10.18 on the heels of the deal launch.

Cypress Semiconductor’s existing 2% convertibles due 2020 traded up to 206.25 from 189 previously, according to Trace data. But the convertible only traded a couple of times, a New York-based trader noted.

Elsewhere, Weatherford International Ltd. was a notable name in a market, which was generally trading quietly. The Weatherford exchangeable, which priced June 1, added back another 1.5 points to trade at 114.4, according to Trace data. The exchangeables had traded as high as 120. The exchangeables and underlying shares, which were up a dime, or 1.7%, at $6.07, were both better in tandem with a lift in crude oil prices. The benchmark West Texas Intermediate crude oil contract was up 2.5% at $49.20 per barrel.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.