Convertible bond market players eye primary; MagnaChip comes upsized; Nabors trades actively

By Stephanie N. Rotondo

Seattle, Jan. 11 – The convertible bond market was focused on new issues in Wednesday trading.

MagnaChip Semiconductor SA, a subsidiary of MagnaChip Semiconductor Corp., brought an upsized $75 million of 5% exchangeable senior notes due 2021 with an exchange premium of 30% on Wednesday.

The deal came tight to the yield talk of 5% to 5.25%, with an exchange premium of 30%. The deal was also upsized from $65 million.

A trader saw the new deal in a 107.5 to 108 context toward the end of the day.

A sellside source said he heard the notes were trading up to 105 in early dealings.

“The stock is up 17 cents, so there’s a lot of leverage,” he said at that time.

The stock eventually ended up 30 cents, or 4.72%, at $6.65.

Barclays and Citigroup Global Markets Inc. ran the Rule 144A deal.

The notes are exchangeable into common stock at a rate of 121.1387 shares, equal to $8.26 per share.

Proceeds will be used for an anticipated cost reduction program to be implemented in the first half of 2017, for capital expenditures and to repurchase stock via a recently approved stock repurchase program and for general corporate purposes.

Meanwhile, Nabors Industries Inc.’s new $500 million of 0.75% exchangeable senior notes due 2024 – a deal priced Tuesday with an exchange premium of 40% – were making up a fair bit of the day’s volume.

A trader said at least $20 million of the debt had traded as of mid-morning. He pegged the paper in a 102.625 to 102.75 context.

That trader later said that the convertibles didn’t move in terms of price but had traded over 35 times during the session.

The stock was meantime up 50 cents, or 2.83%, at $18.19.

The deal came at the rich end of talk for a 0.75% to 1% yield and a 40% initial exchange premium.

Citigroup and Goldman Sachs & Co. led the Rule 144A deal.

The exchange rate is 39.7488 shares per each $1,000 of notes, representing $25.16 per share. Exchanges will be settled with cash, common stock, or a combination, at the company’s option.

The market was still waiting for new deals from Veeco Instruments Inc. and NICE Systems Inc., a unit of NICE Ltd.

After the market closed, Veeco priced an upsized $300 million of convertible senior notes due 2023. The convertibles were upsized from a planned $200 million.

The convertibles priced at par to yield 2.7% with an initial conversion premium of 35%, according to a company news release.

Ahead of pricing, the yield had been talked at 2.625% to 3.125% and the initial conversion premium at 37.5% to 42.5%.

Barclays and Wells Fargo Securities LLC are the joint bookrunners.

A $45 million greenshoe was upsized from $30 million.

NICE is meantime selling $225 million of exchangeable senior notes due 2024, with yield talked at 1.5% to 2% and an exchange premium of 17.5% to 22.5%.

J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and Citigroup are the bookrunners of the Rule 144A deal.

Ahead of pricing, Veeco’s equity was trading off $1.85, or 6.24%, to $27.80, while NICE was down $1.38, or 1.99%, at $67.88.

Both stocks saw above-average trading volume during the session.

Emergent dives

There wasn’t much trading in Emergent Capital Inc.’s 8.5% convertible notes due 2019, but the paper did have a significant fall on Wednesday.

A market source saw the notes trade with a 38 handle, which was down nearly 30 points on the day. Another source placed the issue in a 39.5 to 40 range, down from a 71.75 to 72.5 context in late November.

Earlier in the week, Emergent said it had restructured its debt, merging its Red Falcon life settlement into its White Eagle unit.

White Eagle, for its part, amended its 15-year revolving credit facility, increasing the limit to $370 million and extending the maturity to 2031.

In merging the units, Emergent is hoping to improve cash flows.

The Boca Raton, Fla.-based specialty finance company said back in August that it was looking into its strategic options, including a possible sale. In the company’s latest earnings conference call on Nov. 7, Tony Mitchell, chief executive officer, said that process was ongoing and that once a deal was in the works, the company would address it in another conference call.

However, the company declined to discuss it during the earnings call.

Mentioned in this article:

Emergent Capital Inc. NYSE: EMG

MagnaChip Semiconductor Corp. NYSE: MX

Nabors Industries Inc. NYSE: NBR

NICE Ltd. Nasdaq: NICE

Veeco Instruments Inc. Nasdaq: VECO

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.