Morning Commentary: Gogo convertible notes skyrocket on sale of business segment

By Abigail W. Adams

Portland, Me., Sept. 1 – The convertibles secondary space saw an uptick of activity on Tuesday with $86 million on the tape about one hour into the session.

Gogo Inc.’s 6% convertible notes due 2022 were in focus and skyrocketed alongside stock following news of the sale of a business segment.

The 6% convertible notes rose more than 20 points outright with stock up more than 30% early in the session.

The notes, which had been trading in the mid-70s as recently as mid-August, were changing hands at 120 early in the session.

There was about $7 million on the tape one hour into the session.

Gogo stock traded as high as $6.88 early in the session and was changing hands at $6.60, an increase of 28.4%, shortly before 11 a.m. ET.

Stock skyrocketed after the inflight internet company announced it would sell its commercial aviation business to Intelsat SA for $400 million.

Intelsat is moving forward with the acquisition despite filing for Chapter 11 bankruptcy in May.

Intelsat intends to use cash on hand and borrowings under its $1 billion debtor-in-possession credit facility to finance the transaction, according to a company news release.

Intelsat is also an issuer of convertible bonds.

The company’s 4.5% convertible bonds due 2025 were changing hands at 36 in early August, according to Trace data.

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