Morning Commentary: Planned Cypress Semiconductor deal looks cheap; secondary market trades quietly

By Rebecca Melvin

New York, June 20 – Cypress Semiconductor Corp.’s planned $250 million of 5.5-year convertible senior notes looked cheap at the deal talk circulating before terms were expected to be fixed after the market close on Monday, a convertibles trader said.

The deal was talked at a 4.5% to 5% coupon and a 27.5% to 32.5% initial conversion premium.

Using a credit spread of 700 basis points over Libor and 35% vol., the deal modeled more than 4 points cheap at the midpoint of talk, the trader said, and the credit spread seemed wide to begin with, he said.

Shares of the San Jose, Calif.-based semiconductor manufacturer were down 40 cents, or 3.8%, at $10.22 at late morning, on the heels of the deal launch.

Back in established issues, the market seemed to be trading quietly. Weatherford International plc added back another 1.5 points to trade at 114.4, according to Trace data. The convertibles and the underlying shares, which were at $6.08, were both better in tandem with a lift in crude oil prices.

The benchmark West Texas Intermediate crude oil contract was up 2.5% at $49.16 per barrel.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.