Morning Commentary: Liberty Media, Hercules over par post-pricing; market sees ‘good volume’

By Stephanie N. Rotondo

Seattle, Jan. 20 – A convertible bond trader said there was “good volume” in early dealings on Friday, as the market had two new issues to play around with.

Liberty Media Corp. was making up the bulk of trading after pricing $400 million of 1% cash convertible notes due 2023 with an initial conversion premium of 32.5%.

The deal came upsized from $350 million. Pricing was at the rich end of the 1% to 1.5% yield talk and at the rich end of the conversion premium talk of 27.5% to 32.5%.

A trader saw the paper rising above the issue price to a 100.875 to 101.25 context.

The underlying series C common shares (Nasdaq: LMCK) were up 40 cents, or 1.44%, at $28.24.

Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. LLC, UBS Securities LLC and BofA Merrill Lynch were the joint bookrunners.

Hercules Capital Inc.’s $200 million of 4.375% convertible senior notes due 2022 – a deal priced late Thursday – were meantime seen at 100.5 to 100.75.

The equity (NYSE: HTGC), however, was off 8 cents at $14.19.

The deal was increased from $150 million and came in the mid-range of the 4.25% to 4.5% yield talk. The initial conversion premium of 15% was also in the middle of the 12.5% to 17.5% talk.

Jefferies LLC ran the Rule 144A deal.

As of mid-morning, trading in the new issues made up nearly half of the total volume, according to a trader. He said $61 million of the Liberty convertibles had traded, while another $30 million of the Hercules paper had moved. Total volume was $214 million, he said.

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