Morning Commentary: New issues from Ensco, Zillow continue to trade; Rexnord lists; Peabody firm

By Stephanie N. Rotondo

Seattle, Dec. 12 – New convertible bond issues that priced last week continued to see active trading come early Monday.

Ensco plc’s $750 million issue of 3% exchangeable senior notes due 2024 – a deal priced Wednesday – “worked out pretty nice,” a trader said, seeing the paper moving up to a 114.75 to 115 context.

“The stock moves up; the bonds follow,” he said, placing the underlying equity (NYSE: ESV) at $11.55.

Also from Wednesday, Zillow Group Inc.’s 2% convertible senior notes due 2021 “haven’t moved,” according to a trader.

The trader saw the issue trading busily at 102.5 bid, 102.75 offered, which he said was “virtually where they were when they came out.”

The underlying class C common stock (Nasdaq: ZG) was off 38 cents, or 1.02%, at $26.93 at mid-morning.

From earlier in the month, Rexnord Corp.’s $350 million of 5.75% series A mandatory convertible preferred stock listed on the New York Stock Exchange on Monday.

The ticker is “RXNPA.” The $50-par deal came Dec. 2 with an initial conversion premium of 20%.

The issue was quoted above par.

Away from recently priced issues, a trader said Peabody Energy Corp.’s 4.75% convertible junior subordinated debentures due 2066 were “way up,” a trader said, calling the paper up 3.5 points at 28 bid, 28.5 offered.

“There are prints all over the place,” the trader added.

The bankrupt coal company’s shares (OTCBB: BTUUQ) were up 25 cents, or 2.16%, at $11.85.

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