Morning Commentary: LendingTree’s new 0.625% convertibles do well on debut; ServiceNow a dud

By Stephanie N. Rotondo

Seattle, May 25 – LendingTree Inc.’s new $265 million issue of 0.625% convertible notes due 2022 were faring well in early Thursday trading.

A trader said the paper “did very well,” seeing the notes around 103.

The trader said that “guys like the credit,” which at a stock price of $150-plus was “better than the average convert.”

“The downside is limited,” he added.

The trader also noted that the new issue was making up about $88 million of the total $145 million in trading volume at mid-morning.

The underlying equity (Nasdaq: TREE) was gyrating in early dealings. At mid-morning, the stock was off 25 cents at $156.45.

The deal came upsized from $200 million. Pricing on the yield side was in middle of the 0.5% to 1% talk, and the initial conversion premium of 32.5% was at the rich end of the 27.5% to 32.5% talk.

BofA Merrill Lynch, Goldman Sachs & Co., RBC Capital Markets and SunTrust Robinson Humphrey Inc. ran the books.

Meanwhile, ServiceNow Inc.’s $750 million of 0% five-year convertible notes – a deal priced late Tuesday – were not garnering much interest, according to a trader.

At mid-morning, he said only $2 million of the bonds had traded, placing the paper at 100.625.

The company’s shares (NYSE: NOW) were up nearly 1% in early trading.

The deal broke on Wednesday but failed to gain much traction. A market source said it was because the issue was priced too aggressively.

The deal came with an initial conversion premium of 32.5%.

Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC and RBC were the bookrunners.

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