Vishay prices 'interesting' new deal; International Game convertibles lower; Navistar off

By Stephanie N. Rotondo

Phoenix, May 30 - Convertible bonds were "not moving dramatically," a trader said Wednesday.

Another trader said that European concerns were playing a role and that convertibles investors were "waiting for it to become a disaster play."

In the primary space, Vishay Intertechnology Inc. priced a $150 million offering of 2.25% convertible senior debentures due 2042. The coupon came at the high end of talk of 2% to 2.25%, while the conversion premium was in the middle of 12.5% to 15% guidance.

However, traders were seeing little action in the name, though one trader did note that he found the deal to be "interesting."

Meanwhile, International Game Technology Inc.'s convertibles were "coming in," a trader said, though he added there was nothing credit-specific to cause that. Instead, he opined that it was an overall trend occurring in the market, where investment-grade issues were getting a bit of a haircut.

Navistar International Corp.'s paper was also dipping modestly during the midweek session. The slip came as a Jeffries analyst issued a report that indicated the company could soon cut its earnings forecast - again.

Vishay prices new deal

Malvern, Pa.-based Vishay Intertechnology sold a $150 million offering of 2.25% convertible senior debentures due 2042, the company said in a press release Wednesday.

The Rule 144A convertibles were priced at par with an initial conversion premium is 13.75%.

The coupon came at the high end of talk, while the conversion premium was in the middle of 12.5% to 15% guidance.

But despite the market's overwhelming desire for "more issuance," as one trader put it, there were little goings-on in the new securities.

The trader did note, however, that he found the deal "interesting," especially given that it was 30-year paper.

"It's not the type of credit that I would expect to get away with doing 30-year paper," he said. "They obviously think their stock is cheap."

The stock closed Wednesday's session at $10.72, up 34 cents or 3.28%.

J.P. Morgan Securities LLC and Goldman Sachs & Co. are the joint bookrunners.

The semiconductor manufacturer will use proceeds for share repurchases.

International Game falls

A trader saw International Game Technology's 3.25% convertible notes due 2014 trading at 104.4375 around midday.

"It traded on a swap versus $14," he said. "That's in line; that's in the context."

"They've been trading more recently," said another trader. "They've been coming in."

The second trader noted that there was nothing credit-specific to cause the issue to come in but commented that it was among many investment-grade names that have been experiencing slow declines.

The second trader quoted the issue at 107.375 bid, 107.625 offered, versus a stock price of $14.00.

The stock ended the day at $13.85, down 47 cents, or 3.28%.

International Game is a Las Vegas-based designer, developer and manufacturer of electronic gaming equipment and systems.

Navistar dips

Navistar International's 3% convertible notes due 2014 were "a little bit cheaper than they were," according to a trader.

While he noted that the paper was "not trading all that much," he pegged the issue at 98 bid, 98.125 offered.

He also noted that the common equity had declined on the day. The stock closed at $28.26, down 97 cents, or 3.32%.

The declines came on the back of an analyst report out of Jeffries on Wednesday that said the firm expected the Lisle, Ill.-based manufacturer and seller of commercial and military trucks, buses, diesel engines, recreational vehicles and chassis to once again lower its earnings guidance - this time by at least $1 per share.

The Jeffries analyst also lowered its price target on the stock to $45.00 per share.

James River rocked again

James River Coal Corp.'s 3.125% convertible notes due 2018 were "lower by a couple points," a trader said, as the stock hit "another yearly low."

The equity dropped 38 cents, or 12.75%, to $2.60, while the convertibles were seen in a 25-30 context.

The trader remarked that there was "not much going on" in the convertibles, opining that the lack of activity was due to fear about the company, as well as the sector as a whole.

"The company made what turned out to be a horribly timed acquisition last year," said one analyst in an e-mail to Prospect News. "It's funny that a year ago, most people were worried that the company might be taken over at $30 per share.

"That was then and this is now."

James River Coal is a Richmond, Va.-based coal producer.

Mentioned in this article:

International Game Technology NYSE: IGT

James River Coal Corp. Nasdaq: JRCC

Navistar International Corp. NYSE: NAV

Vishay Intertechnology Inc. NYSE: VSH

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