New Aegean gains on debut; SolarCity extends surge; Resource Capital back above par

By Rebecca Melvin

New York, Oct. 18 - Aegean Marine Petroleum Network Inc.'s newly priced 4% convertible bonds jumped Friday on their debut in the secondary market after the Athens, Greece-based marine fuel logistics company priced $75 million of the notes at the tight end and beyond the tight end of talk.

The new convertibles traded up to 104.75 bid, 105.25 offered versus an underlying share price of $10.56, according to a syndicate source.

SolarCity Corp.'s new 2.75% convertibles touched 120 Friday with the underlying shares climbing 10%, and representing a continuing surge on an outright basis from their debut in the secondary market on Wednesday when the notes hit 111 bid, 112 offered.

The SolarCity convertibles' rapid price rise is reminiscent of that of Tesla Motors Inc.'s 1.5% convertibles, which priced in May and changed hands on Friday at 165, which was up a point on the day. The companies share the same chairman, Elon Musk. Musk is also co-founder and chief executive of Tesla.

Resource Capital Corp.'s new 6% convertibles, which also debuted on Wednesday and immediately slipped below par, regained ground on Friday. They were quoted late in the day at 100.25 bid, 101 offered versus an underlying share price of $6.04.

Elsewhere, Chesapeake Energy Corp.'s convertibles were trading higher outright with the underlying shares of the Oklahoma City-based natural gas company also higher amid takeover rumors.

Equities rose again, with the best performers in the technology-heavy Nasdaq stock market, which gained more than 1%. The S&P 500 stock index added 0.7%, on top of a 0.7% rise on Thursday, and the Dow Jones industrial average edged up about 0.2%

New Aegean rises

Aegean Marine's newly priced 4% convertibles were heard trading at 103.75 bid, 104.75 offered in the early going and then continued to rise, with a late quote at 104.75 bid, 105.25 offered versus an underlying share price of $10.56.

Shares of the Athens, Greece-based marine fuel logistics company were also higher, ending the session up 15 cents, or 1.5%, at $10.51. The shares had been up as much as 4% early Friday.

The strong performance put in by the small deal by a weaker credit surprised some market players. "It shows you how starved we still are," a New York-based trader said, referring to a low level of issuance that the convertibles market has seen in recent months.

Aegean's $75 million of five-year convertible senior notes was not upsized from initial talk, but the pricing came at the rich end and beyond the rich end.

The registered, off-the-shelf deal came at the tight end of 4% to 4.5% coupon talk and beyond the tight end of 30% to 35% premium talk.

The deal has a greenshoe for up to $11.25 million and was sold by bookrunner Jefferies LLC, with ABN Amro Securities (USA) LLC, BB&T Capital Markets, a division of BB&T Securities LLC, and Cowen and Co. acting as co-managers.

The notes are non-callable until Nov. 1, 2016 and then are provisionally callable if shares exceed 140% of the conversion price. If the notes are called, the conversion rate for holders who convert may be increased.

There is takeover protection and dividend protection via conversion rate adjustments for dividends above $0.01 per quarter. The notes have net share settlement and contingent conversion.

Proceeds will be used for general corporate purposes and working capital, including repayment of short-term debt.

SolarCity unplugged

SolarCity's new 2.75% convertibles continued to surge higher on Friday, trading up to nearly 120 with the shares up at $59.47, according to a Trace data, which was up from about 111 bid, 112 offered versus a share price of $51.65 on the first day trading.

Shares jumped $5.37, or 10%, to $59.46, extending a nearly 13% jump Thursday.

The San Mateo, Calif., provider of clean distributed energy priced an upsized $200 million of the five-year convertible notes at the rich end of talk earlier this week.

Shares have been on a tear since Oct. 9 when the company significantly raised its guidance for 2014. Since the company's initial public offering last December, shares have gained 466%.

The news that caused the latest climb was that SolarCity expects deployments for next year to jump to between 475 megawatts and 525 megawatts from an expected 278 megawatts of solar power products in fiscal year 2013, including 78 megawatts that it deployed during its fiscal third quarter.

Also aiding the deal's success could have been the market's overall relief rally on Wednesday spurred by expectations that lawmakers in Washington were going to be able to pass a debt ceiling deal, the trader said.

Mentioned in this article:

Aegean Marine Petroleum Network Inc. NYSE: ANW

Chesapeake Energy Corp. NYSE: CHK

Resource Capital Inc. NYSE: RSO

SolarCity Corp. Nasdaq: SCTY

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