Morning Commentary: GDS prices $200 million convertibles; new issue volume to pick up next week

By Abigail W. Adams

Portland, Me., May 31 – In what may be the lone new deal of the week, GDS Holdings Ltd. priced $250 million of seven-year convertible notes prior to the market open on Thursday.

Pricing came at the midpoint of talk with a coupon of 2% and an initial conversion premium of 32.5%.

Price talk had been for a coupon of 1.75% to 2.25% and an initial conversion premium of 30% to 35%, according to a market source.

The deal appeared to be put up on a 50% to 60% hedge but few bonds were trading on swap early in the session, a market source said.

With GDS Holdings’ country of origin listed as the Cayman Islands, the bonds are not immediately traceable, sources said.

After two weeks of heavy new deal volume, the primary market slowed its pace this past week. New deal volume will remain slow for the remainder of the week but is expected to pick up next week, a market source said.

Meanwhile, the secondary space remained firm on Thursday, a market source said. “From where we were on Tuesday to where we are today, it’s definitely firm,” the source said.

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