iStar adds convertible bond offering to calendar; Wayfair, Workday trade 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% with an initial conversion premium of 32.5% to 37.5%, according to a market source.

The company’s stock was up 31 cents, or 2.77%, at $11.51 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.

Pricing details were not available as of 5:30 p.m. ET.

As for the week’s other new issues, 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 couple of sessions.

The trader saw the issue trading “either side” of 105 toward day’s end.

At mid-morning, the convertibles were pegged in a 105 to 105.125 range. That was down slightly from a 105.5 to 105.75 context on Wednesday.

Wayfair’s equity was also a touch softer, falling 75 cents to $80.22.

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.

Meanwhile, Workday Inc.’s $1 billion of 0.25% convertible senior notes due 2022 – a deal that came ahead of Wednesday’s open – was also actively traded, according to market sources.

One trader saw the issue at 100.25 in late afternoon trading.

Another source said the company’s older issues were not as busy as they have been, though there were some trades.

Like the new issue, the 0.75% convertible notes due 2018 and the 1.5% convertible notes due 2020 were losing ground.

The former closed around 130.5, a loss of about 2 points, according to the source. The 1.5% convertibles were off a similar amount, trading in a 140.5 to 140.75 context.

As for the underlying equity, it was down $1.31, or 1.22%, at $105.55.

The deal came with an initial conversion premium of 37.5%. The terms came right in the middle of the 0% to 0.5% yield talk and the 35% to 40% conversion premium talk.

Morgan Stanley & Co. LLC and BofA Merrill Lynch are the joint bookrunners on the Rule 144A deal.

Though currently trading on the New York Stock Exchange, Workday’s shares are slated to move to the Nasdaq Global Select Market on Sept. 19.

The company plans to use proceeds from the offering to repay or repurchase its outstanding 0.75% and 1.5% convertibles, or to pay cash amounts due on the bonds upon conversion.

Oasis ticks up

Oasis Petroleum Inc.’s 2.625% convertible notes due 2023 were following the stock higher on Thursday, a trader reported.

The trader saw the issue at 101.59 late in the day. That compared to 100.69 earlier in the day.

He noted that the stock was only up some odd cents, but added that it was an $8.00 stock, “so [the move] is meaningful.”

The trader also pointed out that the oil and gas producer’s equity was trading around $7.10 late last week.

Another source saw the convertible notes at 100.625 bid, 101.25 offered. That was deemed up 0.5 point to 1 point.

The company’s shares were meantime up 11 cents, or 1.35%, at $8.27.

On Monday, Houston-based Oasis said it was launching an initial public offering for its Oasis Midstream Partners LP unit. The company is selling 7.5 million of limited partner interest common units between $19.00 and $21.00 apiece.

There is a 1.125 million unit over-allotment option.

Morgan Stanley, Citigroup and Wells Fargo Securities LLC are the bookrunners of the IPO.

Mentioned in this article:

iStar Inc. NYSE: STAR

Oasis Petroleum Inc. NYSE: OAS

Wayfair Inc. NYSE: W

Workday Inc. NYSE: WDAY

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