Morning Commentary: New issues from DexCom, Kaman climb above par in active trading

By Stephanie N. Rotondo

Seattle, May 9 – The convertible bond market was focused on two new deals on Tuesday.

Both issues – a $350 million issue of 0.75% convertible notes due 2022 from DexCom Inc. and a $175 million sale of 3.25% convertible notes due 2024 from Kaman Corp. – priced late Monday.

As of mid-morning on Tuesday, trading in the deals made up about $130 million out of $270 million total trades, a trader reported.

“When these new issues come, that’s all that happens,” he said.

The DexCom paper was making up a bulk of the volume, according to the trader.

He pegged the convertibles in a 100.5 to 100.875 context.

The company’s stock (Nasdaq: DXCM) was off 98 cents, or 1.34%, at $72.42.

J.P. Morgan Securities LLC and BofA Merrill Lynch led the Rule 144A deal, which came with an initial conversion premium of 35%.

As for Kaman, the new convertibles were seen at 100.25.

A trader noted that Kaman is using some of the proceeds from the offering to repurchase more than $103 million of its 3.25% convertible notes coming due Nov. 15. The take-out was “why the stock was up yesterday and why it backed off today,” he speculated.

The underlying shares (NYSE: KAMN) were down $1.15, or 2.2%, at $51.06.

BofA Merrill Lynch, JPMorgan and UBS Securities LLC ran that Rule 144A deal.

Kaman priced with an initial conversion premium of 25%.

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