Midday Commentary: In a sideways market, new Gibson 8 7/8% notes are hitting a power chord

By Paul A. Harris

Portland, Ore., July 26 - In a market where recently minted notes tend to be playing air guitar, hanging at or slightly above new issue price, guitar-maker Gibson Brands, Inc.'s new 8 7/8% notes due Aug. 1, 2018 are hitting a power chord, sources say.

The deal, which came at par in an upsized $225 million issue on Wednesday, was 102½ bid, 103 offered on Friday morning, a trader said.

"It was priced right and it went into the right hands," the trader remarked.

Late Thursday a portfolio manager saw the deal at 102¾ bid, 103½ offered.

The issue traded as high as 103 bid on Thursday, the investor said, expressing the belief that the $225 million deal played to around $3 billion of orders.

Jefferies and Wells Fargo led the deal, which was upsized from $200 million and which priced 12.5 basis points below the tight end of the 9% to 9¼% yield talk.

The Nashville musical instrument company brought the deal to refinance debt.

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