Planned NRG Yield looks cheap; Ingenico prices €500 million; secondary market, energy weaker

By Rebecca Melvin

New York, June 23 – Convertibles players sized up a couple of planned new issues expected to price in the United States after the market close on Tuesday.

NRG Yield Inc.’s planned $250 million deal of five-year senior notes was looking cheap, and CorEnergy Infrastructure Trust Inc.’s deal was seen as offering a nice, chunky coupon but the $75 million size was deemed too small to be of interest to many market players.

Using a credit spread of 300 basis points over Libor and 25% vol., the NRG convertibles looked worth 102.80 at the midpoint of talk, a Connecticut-based trader said.

The NRG deal was talked at a 3% to 3.5% coupon and 22.5% to 27.5% premium.

NRG shares fell $1.94, or 8%, to $22.64 on the heels of the launched new deal, and CorEnergy shares lost 61 cents, or 9%, to $6.07.

Internationally, France’s Ingenico Group, a convertible issuer in the past, launched and priced an offering of €500 million seven-year convertible bonds at the rich end of the 0% coupon talk and richer than talk for a 55% initial conversion premium.

Back among established issues, the convertibles market was weak, with more sellers than buyers, market sources said.

Low equity vol. and higher rates were cited for at least part of the reason for the drag on convertibles.

Energy convertibles traded and were weaker ahead of the new deals even as oil prices improved, lifting many energy stocks.

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