Midday Commentary: New Illuminas flat to better; new SunPower, Trina better bid; new Laclede quiet

By Rebecca Melvin

New York, June 6 – Illumina Inc.’s newly priced convertible notes, which were upsized by $100 million to $1 billion, were seen trading at 100.375 bid, 100.625 offered with the underlying shares up by nearly $3.00.

“The stock bailed out the convert,” a New York-based trader said. “With the stock unchanged, the convertibles were probably wrapped around par, and with the stock up here, the convert is par to 100.5, call it 100.375, 100.625.”

Illlumina’s lackluster debut was attributed to the pricing. The bonds, including the 0% A tranche and the 0.5% B tranche, priced at the rich end of talk including at a 55% initial conversion premium.

“I think guys were surprised by the 55% premium,” the trader said.

Talk was for a 0% to 0.5% coupon for the five-year notes and 0.5% to 1% for the seven-year notes with a 50% to 55% premium for both.

SunPower Corp.’s new $400 million of 0.875% convertible senior debentures were seen at 102 bid with the company’s shares down about 1%, and the new Trina Solar Ltd. deal was 103 bid with its shares little changed.

The Trina deal’s stock reference price came at a 5% discount to the stock close and helped boost the convert. Trina also priced 8,800,000 American Depositary Shares at $11.00 each.

Meanwhile, the Laclede Group Inc.’s new 6.75% mandatory convertibles weren’t heard in trade after the St. Louis-based utility priced $125 million of the units at the tight end and beyond the tight end of talk.

Its stock reference price came at a premium to the June 5 market close.

But all in all, “it’s a good day for the convertibles community,” a trader said, indicating that convertibles investors were reaping profits from the day’s initial trades.

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