Morning Commentary: New Renewable Energy adds outright, on hedge in active trade, old bonds gain

By Rebecca Melvin

New York, May 27 – Renewable Energy Group Inc.’s newly priced 4% convertibles added on both an outright and dollar-neutral, or hedged, basis early Friday after the Ames, Iowa-based biodiesel producer priced an upsized $132 million of the 20-year senior notes at the cheap end of talked terms.

The new Renewable Energy 4% convertibles due 2036 were last at 103 on an outright basis while the company’s shares were a little higher. On a dollar-neutral basis, the convertibles were at 101 versus a stock price of $8.62, which was Thursday’s closing level.

“They are trading well. They have been active and there’s a lot of interest in the deal,” a trader said.

The new issue was upsized slightly from an originally talked $125 million size. Like the market’s other new deals in the last few weeks, pricing came at the cheap end of talked terms.

Referring to the pricing trend, a trader said: “The market is a little cautious right now but at the same time people want new paper, so I think people are really happy with the allocations.”

Renewable Energy’s older notes, the 2.75% convertibles due 2019 – a portion of which will be bought back with proceeds of the new deal – were also higher in early action. They last traded at 96.25, which was up 7.7 points from the previous level, according to Trace data.

© 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.