Midday Commentary: Planned $1.25 billion Citrix deal edging up in gray; models about fair value

By Rebecca Melvin

New York, April 24 - Citrix Systems Inc.'s planned $1.25 billion offering of five-year convertible bonds was edging up in the gray market ahead of final pricing expected after the market close, market players said early Thursday.

The planned Citrix notes, which were talked to yield 0.25% to 0.75% with a 47.5% to 52.5% premium, were seen at 100.25 bid, 100.75 offered in the early gray market.

That pricing puts them at fair value, a Connecticut-based analyst said. "At par, they were less than 1% cheap."

But a second source said the new issue looked a little rich. Using a credit spread of 125 basis points and 30% volatility, the Citrix notes looked to be worth 99.5625, the Connecticut-based trader said.

Nevertheless, the trader added, that still made the deal cheaper than other recent new issues including those from ServiceNow Inc., Akamai Technologies Inc. and Yahoo Inc.

Back among established issues, there was downward pressure on the stocks of several convertible issues that have been trading actively recently, including Tesla Motors Inc. and Vipshop Holdings Ltd.

Vipshop's 1.5% convertibles due 2019 were trading off about 0.5 point on an outright basis at 104.5 to 104.875, according to Trace data. But that was against a stock that was lower by $4.40, or 3%, at $152.36.

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