Morning Commentary: iStar adds convertible bond offering to calendar; Wayfair trades actively

By Stephanie N. Rotondo

Seattle, Sept. 14 – The convertible bond market continued to see a trickle of new deals as iStar Inc. announced plans to sell $250 million of five-year convertible notes on Thursday.

Price talk is for a yield of 2.75% to 3.25% and an initial conversion premium of 32.5% to 37.5%, according to a market source.

The company’s stock (NYSE: STAR) was up 36 cents, or 3.26%, at $11.56 in the wake of the announcement.

Barclays, BofA Merrill Lynch and J.P. Morgan Securities LLC are running the books.

The convertibles offering is being done concurrently with an $800 million offering of senior unsecured notes due 2020 and 2022. The company intends to use the proceeds from both deals, along with cash on hand, to repay debt and to repurchase common stock.

As for early goings-on, Wayfair Inc.’s $375 million of 0.375% convertible senior notes due 2022 – a deal priced late Monday – remained actively traded, according to one trader.

“It’s the most active name,” the trader said, adding that overall activity was waning a bit compared to the last three sessions.

He pegged the Wayfair convertibles in a 105 to 105.125 range at mid-morning. That was down slightly from a 105.5 to 105.75 context on Wednesday.

Wayfair’s equity (NYSE: W) was also a touch softer, falling 52 cents to $80.45.

The Rule 144A deal was increased from an expected $300 million. Initial price talk was for a 0.625% to 1.125% yield and an initial conversion premium of 32.5% to 37.5%.

Goldman Sachs & Co. and Citigroup Global Markets Inc. led the deal.

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