Kinder Morgan mandatory trades lower on debut, Endologix shares plunge ahead of pricing

By Rebecca Melvin

New York, Oct. 27 – Kinder Morgan, Inc.’s newly priced 9.75% mandatory convertible preferred stock moved lower in active trading on its debut in the secondary market on Tuesday after the $1.57 billion deal priced at the cheap end of talked terms.

The Kinder mandatory traded down to about $48.00 from its $49.00 issue price, and was called a point lower on swap, as shares slipped.

Trading in Kinder Morgan was “very heavy, very sloppy,” a New York-based trader said.

Strikes against the deal included the fact that Kinder Morgan was a very large new issue and that it is in the energy sector, which was also weak amid lower crude and natural gas prices.

In addition, other energy-related mandatories pricing this year such as those of Southwestern Energy Co. and WPX Energy Inc. have come at cheaper pricing, the trader said.

Meanwhile, Kinder Morgan was the first significant new deal to hit the convertible market in more than a month, which made its weak but active debut that much more palpable for the market, the trader said.

Elsewhere in the primary market, Endologix Inc. was eyed as shares of the Irvine, Calif.-based developer of aortic disorder treatments plunged ahead of final terms for the convertible expected to be set after the market close.

A syndicate source said Endologix was still expected to price the $150 million deal of three-year convertible senior notes despite the 36% share slide.

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