Rush of deals launched ahead of holiday; 4 at bat, another 4 set for Tuesday; Mirant finds support

By Ronda Fears

Nashville, June 30 - There was a last minute rush of deals - eight totaling $1.28 billion - put on the table to clear a substantial portion of the calendar ahead of the Fourth of July holiday. Four were for Monday's business with another four slated for Tuesday.

A capital markets source said the shadow calendars at the various investment banks are probably not cleared by this week's rush, as the summer is still seen remaining fairly busy with regard to new deals. But it will get a nice week's worth of business done in the holiday-shortened week, he noted.

Wynn Resorts Ltd. and Anixter International Inc. were bringing overnight deals, but Sina Corp. and ProAssurance Corp. launched deals early Monday.

For Tuesday, Level 3 Communications Inc., Fisher Scientific International Corp., Cable Design Technologies Inc. and New Century Financial Corp. are on tap. Fisher is pricing before the open; the others after the market close.

Since the Wynn Resorts offering was a bought deal, terms were immediately available. The casino developer sold $200 million of 12-year convertibles at par to yield 6.0% with a 30% initial conversion premium, with three years of coupon payments secured with U.S. Treasuries.

Lead manager Deutsche Bank Securities was reoffering it at 98.

Wynn shares closed off 6c, or 0.34%, to $17.69.

"I don't know that I would read a lot into the Wynn deal getting reoffered, at least in terms of demand," said a hedge fund trader.

"These deals that came out today are a very mixed lot, some look really rich, others look really cheap - suspiciously cheap. Right now, I think the underwriters are just wanting to clear their calendars for the holiday."

Anixter was pitching $125 million in proceeds of 30-year zero-coupon convertibles talked to yield 3.0% to 3.5% with a 26% to 31% initial conversion premium. At the middle of price talk, the issue price would be 38.015, putting the face amount at $328 million. The deal is being sold on swap, with the company planning to use up to $17 million of proceeds to buy stock simultaneously with the offering.

Anixter stock closed Monday up 55c, or 2.4%, to $23.43. The Anixter 0% due 2020 was quoted up 0.25 point to 32.5 bid, 33 offered.

Deutsche Bank Securities analysts put the new Anixter convert about 5% cheap, at the midpoint of guidance, using a credit spread of 400 basis points over Libor and a 30% stock volatility.

Market sources from the sellside were split on valuations of the Sina deal, but a couple of buyside sources said it looked "a bit rich" and complained of a tough borrow for the stock.

Sina was marketing $80 million of 20-year zero-coupon convertibles talked to yield 0% with a 27% to 34% initial conversion premium.

Lehman Brothers put the Sina deal 1.2% cheap, at the middle of guidance, using a credit spread of 1,000 bps over Treasuries and a 55% stock volatility. Deutsche, however, put it 2.8% rich, using a spread of 1,000 bps over Libor and a 60% stock volatility, plus factoring in 250 bps for the difficult stock borrow.

ProAssurance also was bringing a small deal, pitching $90 million of 20-year convertibles talked to yield 3.75% to 4.25% with a 50% to 55% initial conversion premium.

Lehman put the ProAssurance convert 5.05% cheap, at the mids, using a credit spread of 250 bps over Treasuries and a 25% stock volatility. Deutsche put it 1.625% cheap, using a spread of 325 bps over Libor and a 25% stock volatility.

Level 3's deal was expected to be one of the more high-profile offerings of the week's fare so far.

A buyside trader said there was a bid for the new Level 3 convert at 2 points over issue price, although it is not set to price until after the close Tuesday and five others will be put into play ahead of it.

"This looks cheap enough that probably the terms will get tighter before it prices," the buyside trader said, pegging it about 6% cheap using a spread of 900 bps over Treasuries and a 50% stock volatility.

"I would be surprised if the bids come in a little tomorrow [Tuesday], too."

Level 3 is marketing $250 million of seven-year convertibles talked to yield 2.875% to 3.375% with an 18% to 22% initial conversion premium, via Citigroup.

Deutsche analysts put the new Level 3 convert 6.8% cheap, at the mids, using a spread of 900 bps over Libor and a 50% stock volatility.

Level 3 has two other convertibles outstanding - a 6% due 2009 and 6% due 2010. The 2009 issue was quoted off 0.25 point to 73.625 bid, 75.625 offered and the 2010 issue off 0.125 point to 73.375 bid, 75.375 offered.

Level 3 shares closed Monday off 8c, or 1.19% to $6.66.

Fisher also was bringing a $250 million deal, but plans to price it before Tuesday's open. The 20.25-year notes are talked to yield 2.0% to 2.5% with a 36% to 42% initial conversion premium.

Fisher Scientific shares closed Monday unchanged at $34.90.

Deutsche analysts put the Fisher convert between 3.05% rich and 1.81% cheap, at the mids, using a spread of 325 bps over Libor and a 30% stock volatility.

Also after Tuesday's close, Cable Design is planning to sell $110 million of 20-year convertibles talked to yield 3.5% to 4.0% with a 42.5% to 47.5% initial conversion premium.

Lehman put the Cable Design convert 3.67% cheap, at the mids, using a credit spread of 850 bps over Treasuries and a 50% stock volatility. Deutsche put it 4.56% cheap, using a spread of 750 bps over Libor and a 50% stock volatility.

A buyside source put the Cable Design deal about 2% cheap, at the mids, using a credit spread of 700 bps over Treasuries and a 40% stock volatility.

Late in the day, New Century launched $175 million of five-year noncallable convertibles talked to yield 3.0% to 3.5% with a 28% to 32% initial conversion premium, also with pricing set for after the close Tuesday.

New Century shares closed Monday off 32c, or 0.73%, to $43.44.

With the surge of deals, traders said new paper took quite a ride Monday.

Crown Castle International Corp.'s new 4% - one of the home runs from last week - was heading north in the morning session by about 1.5 points, one dealer said.

Then word spread of more deals emerging and the new Crown Castle convert began to lose ground, he said, speculating of some profit taking by some funds wanting to buy deals slated for this week. It ended down almost 1 point to 102.5 bid, 103 offered with the stock closing up 2c, or 0.26%, to $7.77.

General Motors Corp.'s new jumbo $4 billion of 6.25% notes also were lower on the day, along with the stock.

Elsewhere in the secondary market, traders were talking about gains in Mirant Corp. paper on support for its debt exchange offers and the lack of much reaction to Cendant Corp.'s decision to begin paying a common stock dividend of 7c per quarter.

Mirant said that an ad hoc committee, representing holders of the about 66.67% of its 2.5% convertibles due 2021 and 7.4% senior notes due 2004, have indicated their support of the company's amended exchange offer.

That sent the 2.5s up about 3 points and Mirant's 5.75% convertible due 2007, which is typically bid off the parity mark, rose an equivalent 6 points, a convertible dealer said.

Mirant's bonds were higher pretty much across-the-board, he said.

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