Planned Anacor convertible looks about 2 points cheap; Gran Tierra, Medallion also on deck

By Rebecca Melvin

New York, March 31 – Market players were sizing up new deals in the convertibles space on Thursday, including Anacor Pharmaceuticals Inc.’s $250 million of seven-year convertibles and Gran Tierra Energy Inc.’s $100 million of five-year convertibles, which were expected to price after the market close.

The planned Anacor bonds were looking about 2 points cheap at the midpoint of price talk using a credit spread of 700 basis points to 750 bps over Libor and a 44% to 45% vol., market sources said.

The common shares of Anacor and Gran Tierra dropped in trade, with Anacor ending down 9% and Gran Tierra ending down 7%.

Also in primary market action, Medallion Financial Corp.’s $25 million of five-year convertible senior notes were expected to price late Thursday, but the deal was too small to garner much focus.

“TAXI was too small to look at. It will be tightly held, I imagine,” a New York-based sellsider said, referring to Medallion’s stock symbol, TAXI.

Medallion is a New York-based specialty finance company that arranges financing for taxicab medallions and related assets. Medallion’s common shares traded down only 2% on the heels of the deal launch.

Back in established issues, Anacor’s existing 2% convertibles due 2021, which is a small, $82 million issue, did not appear to have traded. Those bonds were last seen at about 206.25.

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