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Morning Commentary: STMicroelectronics plans two-tranche new issue; Teladoc moves above par
By Stephanie N. Rotondo
Seattle, June 22 – The convertible bond new issue pipeline was showing no signs of letting up early Thursday, as STMicroelectronics NV announced plans for a dual-tranche offering of up to $1.5 billion of convertibles.
The new issue will come with at least $500 million in each piece. Both five-year and seven-year paper is planned. The initial conversion premium on both bonds is expected to be in the range of 35% to 40%.
Yield talk on the five-year notes is negative 0.5% to 0% and for the seven-year notes 0% to 0.5%.
“A blast from the past!” one market veteran remarked. “When was the last STM deal?”
Actually, it was almost three years ago exactly that the semiconductor manufacturer brought a deal, a $1 billion two-tranche issue of 0% convertible notes due 2019 and 1% convertible notes due 2021.
Proceeds from the new issue will be used for an early redemption of the existing 0% notes, as well as a future redemption of the 1% notes.
On word of the offering, STMicroelectronics’ stock (NYSE: STM) declined nearly 3% in early dealings.
Morgan Stanley & Co. LLC and Société Générale CIB are the joint global coordinators and joint bookrunners. Citigroup Global Markets Inc., J.P. Morgan Securities LLC and UniCredit are also acting as joint bookrunners.
As for Teladoc Inc.’s 3% convertible notes due 2022 – a deal priced Wednesday – they were seen at 102 bid, according to a trader.
The underlying stock (NYSE: TDOC) was slightly lower in mid-morning trading.
The $240 million deal was upsized from $200 million and came with an initial conversion premium of 30%. The yield printed at the rich end of the 3% to 3.5% talk and at the midpoint of the 27.5% to 32.5% premium talk.
Jefferies & Co. ran the Rule 144A deal.
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