Add to balance / Manage account | User: | Log out |
Prospect News home > News index > List of issuers F > Headlines for Federal Realty OP LP > News item |
Morning Commentary: Federal Realty’s offering of exchangeable notes in focus early
By Abigail W. Adams
Portland, Me., Jan. 8 – The convertibles primary market hit the ground running on Monday with one new offering on deck.
The deal is the first investment-grade offering of the year, a trend that began in 2023 and promises to continue.
Federal Realty OP LP plans to price $400 million of five-year notes exchangeable for Federal Realty Investment Trust’s stock (expected Baa1/BBB+) after the market close on Monday with price talk for a coupon of 3.25% to 3.75% and an initial exchange premium of 20% to 25%.
The deal was heard to be in the market with assumptions of 175 basis points over SOFR and a 22% vol.
Using those assumptions, the deal looked 1 point to 1.75 points cheap at the midpoint of talk, sources said.
The deal did not look fantastic in terms of cheapness.
However, investment-grade issues are still able to command better pricing due to the quality of their credit.
And Federal Realty is a great company, a source said.
While the influx of low vol. investment-grade paper in 2023 was met with low enthusiasm, the continued march of high-grade names to the convertibles market remains a positive for the asset class.
High-grade convertible issuance has largely been concentrated in utility companies and REITs.
However, the hope is for the sectors to broaden with high-grade tech, industrial and other names to look to the convertibles market for their financing needs, a source said.
Meanwhile, the secondary space was quiet on a mixed morning for equities with the tech heavy Nasdaq outperforming after heavy selling the previous week.
The Dow Jones industrial average was down 46 points, or 0.12%, the S&P 500 index was up 0.51%, the Nasdaq Composite index was up 1.13% and the Russell 2000 index was up 0.46% shortly before 11 a.m. ET.
There was $36 million in reported volume about one hour into the session with no name seeing concentrated trading activity.
© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere.
For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.