Morning Commentary: Cobalt trading frenzy goes on; EZCorp expansion continues

By Abigail W. Adams

Portland, Me., Dec. 22 – For many, the vacation has already begun with secondary market activity slowing to a crawl. While the markets were quiet early in Friday’s session, the trading frenzy surrounding Cobalt International Energy Inc.’s 2.625% convertible notes due 2019 and 3.125% convertible notes due 2024 continued.

The notes have dominated trading activity since the bankrupt petroleum and natural gas exploration company announced a $500 million settlement for its interests off the coast of Angola.

While both notes have weakened since trading activity catapulted the notes up 20 points on Wednesday, they are still both trading more than 10 points above their levels in the run up to Wednesday’s announcements.

Cobalt’s 3.125% notes were trading in the 22 to 22.5 range early in Friday’s session. Cobalt’s 2.625% notes traded at 24.5, according to Trace data.

Investors are now looking to the amount the Houston-based company’s Gulf of Mexico property is worth to determine how much they will receive in the distribution in the company’s assets, a market source said.

EZCorp Inc.’s 2.875% convertible notes due 2024 continued their upward momentum reaching 140, versus a stock price of $12.30 on Thursday. One market source pointed to the 2.875% convertible notes as one of the best deals of 2017.

“It was a small deal but it was a good performer,” a market source said. Since $162.5 million of the 2.875% notes were issued in June, the Austin, Texas-based operator of pawnshops has seen its stock rise about 50%.

The 2.875% convertible notes expanded alongside the equity.

“The notes captured about trhee-quarters of the upside,” a market source said.

© 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.