On Thursday morning MGIC opened at $5.24 and at 11:10 a.m. was down to $5.12 per share.
The company also priced a concurrent $450 million senior notes offering at a 2% interest rate. The offering consists of convertible senior notes due in 2020, with interest payable on April 1 and Oct. 1.
The conversion rate is 143.8332 shares of common stock for each $1,000 in principal of notes, which MGIC said is equal to $6.95 per share.
Underwriters have an option to buy 20.25 million common stock shares and an additional $50 million in debt.
MGIC is following competitor Radian in tapping the equity and debt markets for capital. Radian priced its common stock offering at $8 per share, below its previous close of $8.43 on Feb. 27. And investors seemed to like this offering better as the stock traded above both the pricing level and the previous day’s close and ended that day ahead by $0.02 per share.
Radian’s $350 million debt offering had an interest rate of 2.25%.
MGIC plans to use the proceeds for general corporate purposes, which it said may include increasing the capital at Mortgage Guaranty Insurance Corp. and other subsidiaries. In its 4Q12 results, MGIC said the underwriting unit had a risk-to-capital ratio of 44.7-to-1, well over the 25-to-1 limit 17 states have.