Two Harbors sells upsized deal, trades just over par; Pandora paper rises; SL Green at parity

By Stephanie N. Rotondo

Seattle, Jan. 13 – The convertible bond market kicked off Friday trading with another new issue, this one a $250 million sale of 6.25% convertible senior notes due 2022 from Two Harbors Investment Corp.

The yield came at the cheap end of the 6% to 6.25% price talk.

Towards the close, a trader placed the new issue at par to 100.625.

Another trader saw the paper in a par to 100.125 range in early dealings.

The conversion price is $10.00 per share, representing a conversion premium of 13.5% and a conversion rate of 100 shares per each $1,000 of notes.

A trader noted that there is “a huge dividend on the common [stock],” about 10%. “That’s why [they did the] small premium.”

The stock closed unchanged at $8.81, recovering after being off 12 cents, or 1.36%, at $8.69 at mid-morning.

Credit Suisse Securities (USA) LLC ran the books.

Proceeds will be used to fund the business and investment activities of the company and its subsidiaries, which may include acquisitions, and for general corporate purposes.

Aside from Friday’s new deal, there wasn’t much action in the week’s other new issues, according to a trader.

“There’s no volume,” he said, adding that Monday is a holiday, so desks were already starting to empty.

Pandora improves

Pandora Media Inc.’s 1.75% convertible notes due 2020 improved 3 points to around 102.5, a market source reported Friday.

As for the stock, it rose 76 cents, or 6.33%, to $12.76.

The gains came after the online radio service said it is expecting to beat its fourth-quarter forecast.

The company also said it was reducing its workforce by 7% in order to boost efficiency.

Pandora’s premium service added 375,000 subscribers during the quarter, bringing the total of paid users to 4.3 million.

Back in October, Pandora said it expected to report revenue of $362 million to $374 million and an adjusted loss of $39 million to $51 million.

Full results will be released on Feb. 9.

SL Green moves to parity

A trader saw SL Green Realty Corp.’s 3% convertible notes due 2017 moving around, placing the paper at 138 bid, 138.25 offered.

The trader said the debt was busy “because they are maturing” on Oct. 15. At the current levels, the convertibles trade “probably at parity, or just a small premium.”

The underlying equity was up 29 cents at $106.46.

SL Green is a New York-based real estate investment trust.

Mentioned in this article:

Pandora Media Inc. NYSE: P

SL Green Realty Corp. NYSE: SLG

Two Harbors Investment Corp. NYSE: TWO

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