By Matt Daily and Walden Siew
Aluminum giant Alcoa Inc
The company, which has suffered as the weak global economy sapped demand for the metal, said on Monday it planned to raise about $1.1 billion.
Alcoa said it priced a public offering of $500 million of 5.25 percent convertible notes due 2014, double the $250 million it had initially planned to issue.
Those notes drew strong demand when they priced and in the secondary market on Thursday, traders said. The deal priced at around par and is now trading between 114 cents to 115 cents on the dollar, one trader said.
A lot of equity guys are dumping their stock and buying the bonds because of the attractive coupon, said Mirko Mikelic, a portfolio manager at Fifth Third Asset Management in Grand Rapids, Michigan.
Alcoa also priced 150 million new shares of its common stock at $5.25 each, about 4.2 percent below its closing stock price on Wednesday.
Shares of the company fell 10 percent earlier this week when Alcoa said it would cut its dividend and raise capital amid the moribund demand for industrial metals, but the rebound on Thursday erased those share losses.
The $5.25 price for the shares also appeared to bring some confidence in the market, and one analyst had said he thought the price could have been as low at $5 per share.
Still, the U.S. Federal Reserve's announcement that it would buy long-dated debt, which drove the value of the U.S. dollar down to a two-month low, lifted prices for aluminum, helping Alcoa's shares.
When you start to drive down the value of the dollar, commodities go up, and that's the driving force in Alcoa, said Charles Bradford of Bradford Research.
Aluminum prices on the London Metal Exchange rose 4.6 percent to their highest in more than a month on Thursday.
The company planned to use the proceeds from the offers, which will close on Tuesday, to repay a senior unsecured 364-day revolving credit facility.
Shares of the company were up 10.6 percent at $6.06 on the New York Stock Exchange after reaching an earlier high of $6.10.
(Reporting by Matt Daily; Editing by Lisa Von Ahn and Steve Orlofsky)