Morning Commentary: Dynegy prices equity units, gyrates in trading; Par Pacific also prices

By Stephanie N. Rotondo

Seattle, June 16 – Two new issues hit the convertible bond market early Thursday.

Dynegy Inc. brought $400 million of tangible equity units due July 1, 2019, pricing the securities after the close on Wednesday with a 7% interest rate and a 23.5% conversion premium.

The deal came within talk for a distribution rate of 6.625% to 7.125% and a conversion premium of 22.5% to 27.5%.

Par Pacific Holdings Inc. meantime priced $100 million of 5% convertible senior notes due 2021 with a 15.16% initial conversion premium before the open on Thursday.

The deal came at the cheap end of talk for a yield of 4.5% to 5% and an initial conversion premium of 15% to 25%.

While a trader said there was “not a peep” in the new Par Pacific issue, he noted that trading in the Dynegy paper was on the busier side.

“Everybody is just trading this Dynegy back and forth,” he said.

Upon pricing, the units traded as low as 99 and as high as 100.25 early in the day. The trader said the securities were trending closer to par as the stock bounced up.

The equity underlying the issue (NYSE: DYN) was off 27 cents, or 1.67%, at $15.88 at mid-morning.

The units hold a prepaid stock purchase contract and a senior amortizing note. Upon maturity – July 1, 2019, unless settled earlier at the holder’s option or the company’s election in connection with an acquisition termination redemption – holders will receive between 5.0201 and 6.1996 shares of common stock per purchase contract.

As for the Par Pacific deal, the initial conversion rate is 55.5556 common shares per each $1,000 of notes, equal to an initial conversion price of $18.00 per share. That places the initial conversion premium at 15.16%.

That equity (NYSE: PARR) was trading at $15.55 at mid-morning, down 8 cents.

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