Morning Commentary: ConMed convertible notes offering eyed; Tellurian prices overnight

By Abigail W. Adams

Portland, Me., June 1 – The convertibles primary market kicked off the new month with new offerings as buyers return to the space despite a pullback in equity markets.

ConMed Corp. plans to price $600 million of five-year convertible notes after the market close on Wednesday with price talk for a coupon of 2.25% to 2.75% and an initial conversion premium of 27.5% to 32.5%.

The deal was heard to be marketed with assumptions of 350 basis points over Libor and a 35% vol., according to a market source.

However, some sources felt the volatility assumptions were aggressive.

The deal is the latest refinancing in the convertibles market with a portion of proceeds to be used to repurchase or exchange for cash and shares a portion of the company’s 2.625% convertible notes due 2024.

The 2.625% convertible notes have $340 million outstanding and have been trading at an outright price of 140, a source said.

With holders being taken out of the old notes, the new offering is expected to do well.

Meanwhile, Tellurian Inc. entered into definitive agreements to sell $500 million 6% senior secured convertible notes due May 1, 2025 on Wednesday with an initial conversion price of $5.724.

The deal was wall-crossed and most likely priced overnight with non-disclosure agreements, sources said.

While not a true private, private offering, the deal also was not really a public, private offering.

The deal was most likely placed with a few solid energy investors.

“This thing is put away,” a source said.

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