Midday commentary: Liberty Media's planned $500 million 'looks okay;' Ctrip.com, Seaspan also on tap

By Rebecca Melvin

New York, Oct. 10 - Liberty Media Corp. launched an offering of $500 million of senior convertible notes early Thursday, which it planned to price after the market close. Market sources looking at the valuation said the deal modeled a little cheap for the most part, but credit spread and vol. inputs were not set in stone.

One trader said that using a credit spread of 250 basis points over Libor and 20% vol., the deal looked about 2.6 points cheap at the midpoint of talk.

A second source said a credit spread of 250 bps was too high, but he would be using a slightly higher vol. The underwriter was said to be using a 30% vol. in its valuation, which was deemed too high.

"It looks okay. But it's long," a Connecticut-based trader said of the Liberty deal, which is 10-year, non-callable paper.

The Liberty convertibles are talked with a 1.5% to 2% coupon and a 17.5% to 22.5% initial conversion premium.

The Englewood, Colo.- based company owns interests in electronic retailing, media, communications and entertainment businesses.

Meanwhile, convertibles players had two more deals on tap, both expected to price after the market close.

They included Ctrip.com International Ltd., a Shanghai-based travel services provider, which is bringing $500 million of convertible senior notes talked at a 1.25% to 1.75% coupon and a 37.5% to 42.5% premium; and Seaspan Corp., a Hong Kong-based containership company, which is bringing $125 million of convertibles notes talked with a 2.75% to 3.25% coupon and 22.5% to 27.5% premium.

The Liberty deal was being sold by a jumbo crew of 12 underwriters with active bookrunners Citigroup Global Markets Inc., Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC. Ctrip.com was being sold via J.P. Morgan and Seaspan was being marketed by Deutsche Bank Securities LLC, BofA Merrill Lynch, Citigroup and Credit Suisse Securities (USA) LLC.

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