Midday Commentary: Planned Spectranetics deal looks cheap; planned New Mountain models a tad rich

By Rebecca Melvin

New York, May 28 - Spectranetics Corp.'s $200 million offering of 20-year convertible senior notes was considered cheap for investors, according to a Connecticut-based trader, who used a credit spread of 650 basis points over Libor and a 35% vol. to get the new paper worth 102.8 at the midpoint of talk.

The new deal from the Colorado Springs, Colo.-based maker of single-use medical devices was expected to price after the market close on Wednesday and "will do well," the trader said.

A second deal in the market was seen to be a little rich for investors but was still expected to do fine. New Mountain Finance Corp.'s planned $100 million of five-year convertible senior notes was seen worth 99.2 at the midpoint of price talk, using a credit spread of 425 basis points over Libor and a 15% vol.

A second trader, this one based in New York, said that New Mountain stock yields better than the convertibles, so the stock is probably the better trade if you like the company - a New York-based investment firm - because there is no premium.

Spectranetics shares were down $1.36, or 5.6%, at $23.00 in the early going, and New Mountain shares were off 12 cents, or less than 1%, at $14.31.

Elsewhere, some of the other recent new deals in the convertibles market were trading.

Live Nation Entertainment Inc.'s 2.5% convertibles due 2019, which priced May 20, changed hands at 100.5, according to Trace data, against shares of the Los Angeles-based concert promoter that were down about 3%. And Spirit Realty Capital Inc.'s 2.875% convertibles due 2019 traded at 101.428, against shares of the Scottsdale, Ariz.-based real estate investment trust that were little changed.

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