Morning Commentary: Market eyes Colfax convertibles offering; secondary trading active

By Abigail W. Adams

Portland, Me., Jan. 8 – With the market tone improved, the convertibles primary market launched back to action with the first new deal of the year.

Colfax Corp. plans to price $400 million of $100-par three-year tangible equity units after the market close on Tuesday with price talk for a dividend of 5.5% to 6% and an initial conversion premium of 17.5% to 22.5%, according to market source.

Sources were surprised to see a registered offering in the midst of the partial government shutdown, which has impacted the Securities and Exchange Commission.

“That must have been in line for a while,” a market source said.

The tangible equity units were essentially an equity surrogate, the source said.

While the primary market prepared the first new deal of the year, the secondary space was active with more than $133 million on the tape early in the session.

There was a wide breadth to the trading activity, which was dispersed across names and sectors, a source said.

Ctrip.com International Ltd.’s 1% senior notes due 2020 were among the most actively traded issues in the secondary space with more than $8 million on the tape.

The 1% notes were up slightly on an outright basis to 93.875. After rallying shortly after the opening bell, Ctrip.com stock traded down to $28.87, a decrease of 1.06%, shortly before 11 a.m. ET.

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