Morning Commentary: New Extra Space convertible slightly outperforms shares; older Extra Space adds

By Rebecca Melvin

New York, Sept. 16 – Extra Space Storage Inc.’s newly priced 3.125% exchangeables traded right around par early Wednesday after the Salt Lake City-based real estate investment trust priced $500 million of the 20-year senior notes at the cheap end of talked terms.

The Extra Space paper was quoted at 99.75 bid, 100.25 offered with the underlying shares at $74.48, which was down 34 cents, or about 0.5%.

That was ever so slightly better than the underlying stock, a Connecticut-based trader agreed.

The older Extra Space 2.375% exchangeables due 2033 were better on the company’s agreement to repurchase $165 million of the outstanding older notes concurrently with the pricing of the new deal.

“The olds were trading around 2 points before, and holders got paid 3.2 points over parity,” the trader said.

The new deal was a central focus of the convertibles market, leaving many established issues that were fairly active in Tuesday’s session untraded. Micron Technology Inc.’s 3% convertible due 2043 were untraded at 89.5, for example.

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