Morning Commentary: Fisker prices upsized convertible notes; trading volatile on debut

By Abigail W. Adams

Portland, Me., Aug. 13 – The last new convertible bond deal of the week hit the secondary space on Friday.

Fisker Inc. priced an upsized $625 million of five-year green convertible notes after the market close on Thursday at par with a coupon of 2.5% and an initial conversion premium of 30%.

Pricing came in line with revised talk for a fixed coupon of 2.5% and at the cheap end of talk for an initial conversion premium of 30% to 35%, according to a market source.

Revised talk widened from initial price talk for a coupon of 1.5% to 2% and an initial conversion premium of 40% to 45%.

The offering valued about 14 points cheap based on the revised price talk.

By widening talk “the underwriter did the right thing by investors, and the company got a good result too,” a source said.

Despite the cheapness of the deal, the new paper was volatile on its secondary market debut.

The notes traded as high as 100.5 pre-market.

However, they were volatile early in Friday’s session.

The notes traded as low as 98.375 and as high as 100.25 within the first hour after the market open, a source said.

They were trading below par shortly before 11 a.m. ET with the notes marked at 99.125 bid, 99.625 offered versus a stock price of $14.63.

While the notes were down outright, they were expanding dollar-neutral, a source said.

Fisker’s stock was changing hands at $14.95, a decrease of 1.32%, shortly before 11 a.m. ET.

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