Morning commentary: Starwood Waypoint launches deal; Sprit Realty unchanged on hedge

By Rebecca Melvin

New York, June 30 – Starwood Waypoint Residential Trust’s planned $150 million deal of five-year convertible senior notes was getting a look from market players early Monday after the offering was launched ahead of the open with anticipated same-day pricing.

Starwood Waypoint “looks okay at best,” a New York-based trader said of the new deal in terms of cheapness, and attaching a credit spread to it of about 400 basis points over Libor.

The real estate investment trust is based in Oakland, Calif.

Among established issues, the longer-dated convertibles of Scottsdale, Ariz.-based REIT Spirit Realty Capital Inc. change hands at 100.125, which was down about 0.25 point on an outright basis, but unchanged on a dollar-neutral basis, against a stock price that was lower by 8 cents, or 0.7%, at $11.27, a trader said.

Spirit Realty priced $747.5 million of convertibles in two tranches in May.

Elsewhere Spectranetics Corp.’s 2.625% convertibles traded off nearly 0.5 point on an outright basis to 104.7, according to Trace data. Shares of the Colorado Springs, Colo.-based maker of single-use medical devices were off 31 cents, or 1.4%, at $22.86.

Spectranetics priced $230 million of the bonds at the end of May.

Market participants were expecting a fairly quiet holiday-shortened week, with Monday marking the end of the quarter.

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