Primary calendar adds convertibles from Hess; LVMH, KemPharm price; Newmont bonds improve

By Stephanie N. Rotondo

Seattle, Feb. 4 – The convertible debt market saw one new deal added to the calendar on Thursday.

Hess Corp. said it planned to sell $500 million of series A mandatory convertible preferred stock, a deal being done concurrently with an underwritten public offering of common stock.

Goldman Sachs & Co. is running the books.

The $50-par preferreds automatically convert to common shares on Feb. 1, 2019.

Additionally, KemPharm Inc. brought $75 million of 5.5% convertible notes due 2021 via a Rule 144A offering. The notes are convertible into common stock at the holder’s option at an initial conversion rate of 58.4454 shares per each $1,000 of notes.

The initial conversion price represents a 15.37% premium over Wednesday’s closing share price of $14.83.

In Europe, there was a $600 million offering of 0% non-dilutive cash-settled convertible bonds due 2021 from LVMH, the Paris-based maker of spirits like Dom Perignon and Moet.

The deal was initially slated to be $500 million but was soon increased.

The $250-par bonds are priced at 103, at the rich end of talk of par to 103. The deal came at a yield of negative 0.59% with a 37.5% initial conversion premium. That was also the rich end of talk, which was set for a yield of between minus 0.59% and 0% and an initial conversion premium of 32.5% to 37.5%.

Proceeds are for general corporate purposes.

Newmont rises with gold

In the secondary, Newmont Mining Corp.’s 1.625% convertible notes due 2017 were trading actively and better.

One trader said the paper was up over a point, trading around 101. He noted that parity was 53.

“I don’t know why they are up so much, unless the company is buying them back themselves,” he said. “But I don’t understand why they would do that” given where the paper was trading.

The stock meantime closed up $1.04, or 4.66%, at $23.38.

The gold mining company might have been benefitting from a gain in gold prices, though the trader said even that didn’t seem enough to warrant such a gain.

Gold prices improved nearly $15 on the day.

Cemex active on earnings

Also on the busier side was Cemex SAB de CV.

Late Thursday, the Mexico-based aggregate, cement and concrete producer reported its first full-year profit since 2009. That in turn resulted in a decent gain in the equity but a mixed bag for the bonds.

“The stock is up 10%, so I assume the bonds are in good shape too,” a trader said, though he commented that the 3.25% convertible bonds coming due in a month were unchanged early in the day.

“They have so much debt, it’s ridiculous,” the trader added.

At another shop, the 3.72% convertible notes due 2020 were pegged at 70.125, which compared to levels around 72.5 previously. The 3.75% convertible notes due 2018 ended at 88.625, up from 85.125.

The stock closed at $5.20, up 55 cents, or 11.83%.

For the fourth quarter, Cemex posted a profit of $144 million, versus a $178 million loss the year before. For all of 2015, profit came to $75 million.

Mentioned in this article:

Cemex SAB de CV NYSE CX

Hess Corp. NYSE: HES

KemPharm Inc. Nasdaq: KMPH

LVMH Frankfurt: MOH

Newmont Mining Corp. NYSE: NEM

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