Morning Commentary: Chesapeake plans new issue; price talk emerges on DTE deal; Recipharm on tap

By Stephanie N. Rotondo

Seattle, Sept. 29 – The new issues continued to flow into the convertible bond market on Thursday.

Chesapeake Energy Corp., for one, said it was offering $850 million of 10-year convertible senior notes via a Rule 144A offering.

The company plans to use the proceeds for general corporate purposes, which may include debt repurchases and repayment of near-term maturities.

Meanwhile, the market was also waiting for DTE Energy Co.’s $600 million sale of mandatory convertible tangible equity units, a deal first announced late Wednesday.

Pricing is expected later in the session. Price talk is 6.25% to 6.75%, with a conversion premium of 20% to 25%, according to a market source.

The $50-par units will hold a contract to purchase common stock and a 1/20th, or 5%, undivided beneficial ownership interest in a $1,000-par remarketable senior note.

Proceeds will be used for the purchase of midstream natural gas assets.

On the international stage, Recipharm AB said it planned to sell SEK 1 billion of senior unsecured convertible bonds due 2021.

Price talk is 2% to 2.75% with an initial conversion premium of 30% to 35%. Pricing is expected Thursday afternoon.

The Swedish drug manufacturer said it would use funds from the sale for growth opportunities.

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