Morning Commentary: Harmonic trades around par after pricing wide; planned SunPower looks cheap

By Rebecca Melvin

New York, Dec. 9 – Harmonic Inc.’s newly priced 4% convertibles were trading around 100 to 100.5 in the early going on Wednesday, which was deemed about flat on swap, according to a trader, after the San Jose, Calif.-based video infrastructure company priced $125 million of the five-year senior notes well wide of the 2.75% to 3.25% coupon and 37.5% to 42.5% premium talk.

The new notes have an initial conversion premium of 28%.

Harmonic shares closed at $4.49 on Tuesday and were lower in early trade at $4.43 last.

Also in the primary space, SunPower Corp.’s proposed $350 million of seven-year convertible senior debentures were seen to be worth about 102.5 at the midpoint of price talk, using a credit spread of 600 basis points over Libor and 35% vol. The borrow cost for the deal was seen to be minus 1.5%, according to a Connecticut-based trader.

The SunPower convertibles were talked to yield 3.5% to 4% with an initial conversion premium of 32.5% to 37.5% and were expected to price after the market close Wednesday.

SunPower shares were down $1.18, or 4.7%, in the early going at $23.92.

SunPower’s existing convertibles were not yet heard in trade.

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