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Morning Commentary: Square deal comes upsized, jumps over par; Silicon prices; Viavi still busy
By Stephanie N. Rotondo
Seattle, March 1 – It was another new issue day for the convertible bond market on Wednesday.
Square Inc. priced $400 million of 0.375% convertible senior notes due 2022 before the market opened.
The deal came with an initial conversion premium of 32.5%, which was at the mid-line of talk. Yield came rich to the 0.375% to 0.875% talk.
The deal was also upsized from $350 million.
Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC ran the books.
One sellside source said the new convertibles traded as high as 103.75 outright, calling that up about 2.5 points on swap.
Another market source pegged the issue around 103.
The company’s stock (NYSE: SQ) was also faring well, rising 15 cents to $17.47.
Meanwhile, Silicon Laboratories Inc. said late Tuesday that it had sold $350 million of 1.375% convertible senior notes due 2022, with an initial conversion premium of 37.5%.
The deal came in the middle of the 1.25% to 1.75% yield talk and on the rich end of the 32.5% to 37.5% premium talk.
Goldman Sachs and Wells Fargo Securities LLC were the bookrunners.
A trader said the bonds were trading as high as 102.75 in early dealings.
As for the underlying equity (Nasdaq: SLAB), it was up $1.15, or 1.7%, to $68.65.
From early Tuesday business, Viavi Solutions Inc.’s $400 million of 1% convertible senior notes due 2024 continued to be in play.
A source said the paper traded at 101.375 versus a stock price (Nasdaq: VIAV) of $10.10.
The terms came rich to the initial yield talk of 0.5% to 1%, but cheap to the premium talk of 32.5% to 37.5%.
JPMorgan, Morgan Stanley & Co. LLC and Credit Suisse Securities (USA) LLC led the deal.
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