Pebblebrook convertibles hit the aftermarket, expand on debut; Pinduoduo, Uber active

By Abigail W. Adams

Portland, Me., Dec. 11 – The last new convertible bond deal of the week hit the aftermarket on Friday – Pebblebrook Hotel Trust’s upsized $450 million offering of six-year convertible notes.

The deal brings the weekly tally for new paper to $2 billion, which priced over three deals.

With the coming week the last full week before the holidays, it will most likely be the last week for new deal activity as well.

However, sources queried were unsure what the calendar would look like with many eager to close the books on 2020.

Pebblebrook’s convertible notes were in focus in the secondary space and saw a large dollar-neutral expansion on debut, as has been the trend.

Outside of new paper, the secondary space was relatively quiet with the heavy trading volume seen over the past two weeks moderating.

There was $480 million in reported volume about one hour before the market close.

Uber Technologies Inc.’s 0% convertible notes due 2025 continued to top the volume charts.

Pinduoduo Inc.’s 0% convertible notes due 2025 also remained active with the notes improved dollar-neutral as stock continued to trend down after recently hitting a new 52-week high.

Pebblebrook in focus

Pebblebrook priced an upsized $450 million offering of six-year convertible notes after the market close on Thursday at par with a coupon of 1.75% and an initial conversion premium of 35%.

Pricing came at the rich end of talk for a coupon of 1.75% to 2.25% and at the midpoint of talk for an initial conversion premium of 32.5% to 37.5%, according to a market source.

While the offering was upsized, the greenshoe was downsized to $50 million.

The initial size of the offering was $350 million with a greenshoe of $52.5 million.

The new paper dominated activity in the secondary space and was posting gains on an outright and dollar-neutral basis.

The 1.75% notes were changing hands at 101.75 versus a stock price of $18.78 in the late afternoon.

They were seen up 2.5 points on a dollar-neutral, or hedged, basis early in the session.

“They’re doing well despite the upsize,” a source said.

There was more than $27 million in reported volume heading into the late afternoon, making them one of the most actively traded issues during Friday’s session.

Pebblebrook’s stock traded to a high of $19.06 and a low of $18.23 before closing the day at $18.58, a decrease of 1.54%.

Uber edges lower

Uber’s 0% convertible notes due 2025 continued to see heavy trading volume.

After closing out the previous session on a 105 handle, the notes were down about 5/8 point with stock off 3% during Friday’s session.

The 0% notes were changing hands at 104.75 versus a stock price of $52.39 in the late afternoon.

There was more than $20 million on the tape.

Uber’s stock traded to a high of $55.02 and a low of $52.33 before closing the day at $52.63, a decrease of 3.16%.

Pinduoduo active

Pinduoduo’s 0% convertible notes due 2025 were also active with the notes improving on a dollar-neutral basis as stock continued to trend downward.

The 0% notes were changing hands at 112.78 versus a stock price of $149.11 in the late afternoon, according to a market source.

They gained about 1 point dollar-neutral.

The Shanghai-based e-commerce platform’s American Depositary Shares traded to a low of $141.46 and a high of $150.12 before closing the day at $147.65, a decrease of 4.33%.

The company’s equity has been on a downward trend since it broke out to a new 52-week high of $163.10 in intraday activity on Wednesday.

Mentioned in this article:

Pebblebrook Hotel Trust NYSE: PEB

Pinduoduo Inc. Nasdaq: PDD

Uber Technologies Inc. NYSE: UBER

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