Morning Commentary: Convertibles space quiet to end week; Greenlight slow to trade

By Abigail W. Adams

Portland, Me., Aug. 3 – The convertible space stood poised to round the week out quietly with light trading volume in the secondary space.

New paper from Greenlight Capital Re, Ltd. was not seen trading early in the session, a market source said.

Greenlight Capital Re priced $100 million of five-year convertible notes after the market close on Thursday with a coupon of 4% and an initial conversion premium of 25%.

The deal came at the cheap end of price talk for a coupon of 3.5% to 4% and an initial conversion premium of 25% to 30%.

There was about $55 million on the tape early in the session, but the trading activity was not concentrated on a particular name, a market source said.

Apollo Commercial Real Estate Finance, Inc. announced a privately negotiated exchange with holders of its 5.5% convertible notes due 2019.

The company will exchange $206.2 million of the outstanding notes for cash and shares, leaving $48.6 million outstanding.

“That takes care of the hedge,” a market source said.

Gogo Inc.’s 3.75% convertible notes due 2020 have been active in the space recently and saw some early morning trades on Friday.

The notes continued to trade around 86.25 with stock up about 7 cents. The notes dropped to the mid-80s after the company withdrew its forward guidance in its first-quarter earnings report in early May.

Gogo is expected to report earnings in the coming week.

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