iStar’s new convertible issue breaks, gyrates around par; Wayfair, Workday active, soften

By Stephanie N. Rotondo

Seattle, Sept. 15 – When iStar Inc.’s $250 million of 3.125% convertible notes due 2022 broke for trading early Friday, the deal was already making up the bulk of trading.

That trend then continued throughout the day, as the new issue initially moved above par but then weakened.

At day’s end, a trader pegged the bonds in a 99.75 to par range.

At mid-morning, a trader said $51 million of the bonds had traded, which was “half the volume.”

He pegged the paper in a 100.26 to 100.75 context.

The company’s stock was also trending downward, falling 24 cents, or 2.09%, to $11.27.

The Rule 144A offering came late Thursday via Barclays, BofA Merrill Lynch and J.P. Morgan Securities LLC.

The initial conversion premium is 35%.

Pricing was in the middle of the 2.75% to 3.25% yield talk and the 32.5% to 37.5% premium talk.

Conversions will be settled in common stock at an initial conversion rate of 64.3563 shares per each $1,000 of notes. That equals an initial conversion price of $15.54 a share.

The convertibles sale is being done concurrently with an $800 million offering of senior notes due 2020 and 2022. Proceeds from both deals will be used, along with cash on hand, to redeem and repay in about $1.4 billion in debt securities. The company will also use $46 million to repurchase 4 million shares of common stock via privately negotiated transactions with purchasers of the new convertibles.

Meanwhile, the week’s other new issues continued to be actively traded. However, Wayfair Inc.’s $375 million of 0.375% convertible notes due 2022 and Workday Inc.’s $1 billion of 0.25% convertible senior notes due 2022 were losing ground after being on the firm side since pricing.

For its part, Wayfair’s convertibles – which priced late Monday with an initial conversion premium of 35% – finished “roughly” around 104.375, according to a trader.

That compared to trades with a 105 handle at the open, he said.

“All dealer buys,” he said of the declining trades.

Wayfair’s equity was also softer, slipping 47 cents to $79.76.

As for Workday, it followed iStar’s lead and closed on either side of par.

A trader quoted the issue at 99.875 bid, par offered.

The underlying stock was meantime off 57 cents at $105.04.

Workday priced ahead of Wednesday’s open, coming with a 37.5% initial conversion premium

Mentioned in this article:

iStar Inc. NYSE: STAR

Wayfair Inc. NYSE: W

Workday Inc. NYSE: WDAY

© 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.