Morning Commentary: New Lumentum deal added to convertibles calendar; Square, Silicon do well

By Stephanie N. Rotondo

Seattle, March 2 – There continued to be a new issue focus in the convertible bond market early Thursday.

Ahead of the open, Lumentum Holdings Inc. announced a $350 million Rule 144A offering of seven-year convertible senior notes, talked at a 0.25% to 0.75% yield and an initial conversion premium of 25% to 30%.

Goldman Sachs & Co. is running the books.

In response, the company’s stock (Nasdaq: LITE) dipped $1.90, or 3.97%, to $46.00.

From Wednesday, Square Inc.’s $400 million of 0.375% convertible senior notes due 2022 were pegged in a 102.5 to 102.75 range.

The underlying equity (NYSE: SQ) was slightly better in early trading, adding a penny to $17.23.

The deal came via Goldman Sachs and J.P. Morgan Securities LLC 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.

Meanwhile, Silicon Laboratories Inc.’s $350 million of 1.375% convertible senior notes due 2022 – a deal priced late Tuesday with an initial conversion premium of 37.5% – were seen in a 102.75 to 103.25 context.

The company’s shares (Nasdaq: SLAB) were trending higher, rising a quarter to $69.40.

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.

“They did well,” a trader said of both deals.

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