Morning Commentary: Great Plains’ new mandatory convertible preferreds in focus; SolarCity firms

By Stephanie N. Rotondo

Seattle, Sept. 28 – All eyes were on Great Plains Energy Inc.’s $750 million offering of 7% $50-par series B mandatory convertible preferred stock in early convertibles trading on Wednesday.

The deal came overnight with a 20% initial conversion premium and at the tight end of the 7% to 7.5% talk.

“It’s probably the most active name,” one trader said, pegging the issue at $50.80 at mid-morning.

Another trader said the issue was up to “$51-ish.”

“Part of that is the stock coming back,” he said.

The common shares (NYSE: GXP) were down 8 cents at $27.08 at mid-morning. However, that was up from opening levels of $26.88.

A trader also commented that while there has been “a little bit of weakness” in the mandatory convertible space of late, “people are generally constructive” on the new issue.

Goldman Sachs BDC Inc. also priced a deal overnight, selling $100 million of convertible senior notes due 2022 at par to yield 4.5%.

The notes have an initial conversion premium of 10%.

However, a trader said there was little goings-on in that deal.

Away from new issues, SolarCity Corp.’s convertible bonds – the 1.625% convertible notes due 2019 and the 2.75% convertible notes due 2018 – were “active,” according to a trader.

The trader noted that the name doesn’t tend to be overly busy but that the debt was moving up on news that Mexico could invest up to $1 billion in the company over the next five years.

The news was “doing well for that credit,” the trader said.

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