New ON Semiconductor looks fair value to cheap; Frontier launches $1.75 billion mandatory

By Rebecca Melvin

New York, June 2 – Market players were sizing up two new deals in the U.S. convertibles primary market Tuesday, while a bumper crop of new deals materialized internationally.

ON Semiconductor Corp.’s planned $600 million of 5.5-year convertibles, launched after the market close on Monday for pricing Tuesday, was looking right about fair value to a little cheap at the talked terms, traders said.

“They model almost exactly fair value, but I think the deal will do well given the lack of paper in the market,” a New York-based trader said. A second trader said they were about 2 points cheap at the midpoint of talk, based on his assumptions.

Phoenix-based ON makes and sells semiconductors for electronic devices. ON Semi shares ended the session down 0.8%.

ON Semi’s existing 2.625% paper traded down 3.5 points on an outright basis to 132.627, according to Trace data.

Also early Tuesday, Frontier Communications Corp. launched an offering of $1.75 billion of convertible preferred stock in a registered deal talked to yield 11.125% to 11.625% with an initial conversion premium of 12.5% to 17.5%.

Frontier, a Stamford, Conn.-based wireline communication provider, is also pricing $750 million of common stock. The deals are earmarked to fund its previously announced acquisition of Verizon assets.

That deal is slated to price late Thursday, and at the end of Tuesday, the Frontier shares were up 1.6%.

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