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Kinder Morgan’s (KMI) big convertible preferred stock issue apparently was priced in line with expectations. The three-year mandatory convertible preferred will carry a 9.75% coupon and a price of $49 each, according to one investor.
The issue was priced at a slight discount to the face value of $50, effectively resulting in a higher yield than 9.75%. The conversion premium is believed to have been set at 17.5%, the low end of the projected range of 17.5% to 22.5%. The deal size was originally set at $1.6 billion. Lead underwriter Citi declined to comment.
The prospect of a costly convertible preferred issue and hedging from arbitragers weighed on Kinder Morgan shares Monday as they declined $1.67 to $27.56. The shares were down 31 cents to $27.25 in early trading Tuesday.
The new preferred issue is expected to trade on the New York Stock Exchange as KMI Preferred A.
The issue was priced at a slight discount to the face value of $50, effectively resulting in a higher yield than 9.75%. The conversion premium is believed to have been set at 17.5%, the low end of the projected range of 17.5% to 22.5%. The deal size was originally set at $1.6 billion. Lead underwriter Citi declined to comment.
The prospect of a costly convertible preferred issue and hedging from arbitragers weighed on Kinder Morgan shares Monday as they declined $1.67 to $27.56. The shares were down 31 cents to $27.25 in early trading Tuesday.
The new preferred issue is expected to trade on the New York Stock Exchange as KMI Preferred A.
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