By Abigail W. Adams
Portland, Me., Nov. 7 – Apollo Commercial Real Estate Finance Inc.’s 4.75% convertible bond due 2022 traded about 300 times on Tuesday, after the company priced a $100 million add-on to the note at 100.5. The deal came at the rich end of talk that placed the price between 100.25 and 100.5, according to market sources.
Trading ranged from a low of 99.5 to a high of 101.37 during the day, according to Trace data.
The flurry of trading activity in the notes is largely due to the company’s reputation, which has prompted good increases in its shares and bonds, a market source said, adding that the issuer is seen as a good credit.
The deal and its greenshoe were upsized from to $100 million from $75 million and to $15 million from $11.25 million respectively.
Apollo stock was down slightly in trading Tuesday, closing at $18.16, a decrease of 0.71%.
Insulet upsizes
Insulet Corp. upsized its Rule 144A offering to $350 million from $300 million and similarly increased the greenshoe, a market source said. The deal was set to price late Tuesday.
Using a credit spread of 325 basis points over Libor and 32% volatility, the fair value of the deal is 101 at the rich end of talk, a market source said.
Talk placed the yield at 1.375% to 1.875% with an initial conversion premium of 25% to 30%.
Proceeds from the deal will be used to repurchase or settle Insulet’s 2% convertible due 2019 and for other company purposes.
There was little interest in the 2% convertible during Tuesday’s session but its price gained 4 points in trading, increasing to 155.4 from the 151 range on Monday, according to Trace data.
Sarepta Therapeutics announced plans to price $375 million of seven-year convertibles after the market close Wednesday.
The deal is talked at a 1.5% to 2% coupon and an initial conversion premium of 35% to 40%, according to market sources.
The Rule 144A deal for the senior notes was announced after Tuesday’s market close. It carries a greenshoe of $75 million.
J.P. Morgan Securities and Goldman Sachs are active bookrunners for the deal with Credit Suisse a passive bookrunner.
Priceline tumbles
In secondary action Tuesday, Priceline Group Inc.’s outstanding convertible notes took a tumble after the company lowered its future guidance in its 10-Q filing with the Securities and Exchange Commission on Tuesday.
Priceline’s 0.35% convertibles due 2020 closed the day at 132.05, about 16 points lower than the previous closing price of 148. Prices ranged from 138 to 129 throughout the session.
Priceline’s 1% convertible due March 15, 2018 fell almost 25 points, closing the day at 174.11, according to Trace data. The company’s 0.9% convertible fell about 8 points, closing the day at 110.98.
Priceline stock also plummeted 13.52% on Tuesday, closing the day at $1,645.72. While the company announced a 21.9% increase in gross profits in its 10-Q, it projected a decrease in previously stated expectations for future growth.
The lowered future guidance is largely due to the impact economic uncertainty in the European Union and China is expected to have on travel demand and also from heavy competition in the industry, according to the filing.
Recent issues
Weibo Corp.’s recently priced 1.25% convertible due 2022 continued to see active trading with prices remaining steady in the 107 to 108 range. Cypress Semiconductor Corp.’s 2% convertible due 2023 also continued to swap hands after its pricing last week with prices remaining stable in the 105 to 106 range, according to trace data.
Mentioned in this article:
| Apollo Commercial Real Estate Finance Inc.: | NYSE: ARI
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| Insulet Corp.: | Nasdaq: PODD
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| Sarepta Therapeutics: Nasdaq: SRPT
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| Priceline Group Inc.: | Nasdaq: PCLN
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| Weibo Corp.: | Nasdaq: WB
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| Cypress Semiconductor Corp.: | Nasdaq: CY
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