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Morning Commentary: Gannett’s convertible notes hit the market; trading volume ‘crazy low’
By Abigail W. Adams
Portland, Me., April 4 – New convertibles from Gannett Co. Inc. hit the secondary market on Wednesday and were among the only movers in a space where trading volume has been “crazy low,” a market source said.
Shortly after launching, Gannett priced $175 million of 4.75% convertible notes due 2024 after the market close Tuesday with an initial conversion premium of 22.5%.
Pricing came at the mid-point of talk for a coupon of 4.625% to 4.875% and at the cheap end of talk for an initial conversion premium of 22.5% to 25%, according to a market source.
The new notes were trading close to par at the market open but traded up to 101 even with stock down, a market source said. “They definitely did well,” the source said.
Gannett stock was down more than 7% early in the session.
While new paper from Gannett was active, the rest of the convertible space was “strangely quiet” early in Wednesday’s session, a market source said.
With the Dow Jones industrial average and the S&P 500 off to another tumultuous start on Wednesday, “it seems like everyone’s on the sidelines,” the source said.
“Nothing’s really moved. There’s really nothing expanding or contracting,” the source said.
Trading volume in the secondary space has been abnormally low since the start of the week.
With volatility again roiling the markets, most players are just watching with hedge players adjusting their bets and outright accounts figuring out where they want to be.
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