Peabody convertible notes in focus; Snap notes volatile; Expedia active; Bandwidth drops

By Abigail W. Adams

Portland, Me., Feb. 24 – The convertibles primary market returned to action after a more than one-week hiatus with one new offering on deck.

Peabody Energy Corp. plans to price $250 million of six-year convertible notes after the market close on Thursday.

The deal looked cheap based on underwriters’ assumptions, sources said.

Meanwhile, it was a volatile day in the convertibles secondary space as equities launched the day deep in the red but snapped their losing streak mid-session as president Joe Biden addressed the nation about Russia’s attack on the Ukraine.

After opening down more than 600 points, the Dow Jones industrial average closed the day up 92 points, or 0.28%.

The S&P 500 index opened the day down 2.5% but closed the day up 1.5%.

The Russell 2000 index was also down 2.5% at its lows early in the session but closed the day up 2.61%.

The Nasdaq Composite opened the day down more than 3.5% but closed the day up 3.34%.

While equities saw extreme swings on Thursday, trading activity in the convertibles secondary space was about average with $68 million in reported volume about one hour into the session and $475 million in reported volume about one hour before the market close, according to a market source.

Expedia Inc.’s 0% convertible notes due 2026 (Baa3/BBB-/BBB-) were active with stock down as geopolitical risks continued to pressure the travel industry.

Snap Inc.’s 0.125% convertible notes due 2028 were volatile alongside stock with the notes dropping below par for the first time since hitting the secondary space but closing the day above.

Bandwidth Inc.’s 0.5% convertible notes due 2028 sank further into distressed territory as stock tanked following earnings.

Peabody eyed

Peabody Energy plans to price $250 million of six-year convertible notes after the market close on Thursday with price talk for a coupon of 3% to 3.5% and an initial conversion premium of 30% to 35%, according to a market source.

The deal from the coal producer was heard to be in the market with assumptions of 850 basis points over Libor and a 45% vol.

Using those assumptions, the deal modeled 2.85 points cheap at the midpoint of talk, a source said.

Expedia active

Expedia’s 0% convertible notes due 2026 were active with the notes coming in alongside stock.

The notes were changing hands at 117.125 versus a stock price of $185.66 in the late afternoon, according to a market source.

There was $21 million in reported volume.

The e-commerce travel company’s stock traded to a low of $181.91 and a high of $194.58 before closing the day at $193.74, a decrease of 2.46%.

While broader markets rallied on Thursday, the travel industry remained under pressure due to the escalation of military conflict in the Ukraine.

Bandwidth lower

Bandwidth’s 0.5% convertible notes due 2028 sank further into distressed territory as earnings drove down stock over 30%.

The 0.5% convertible notes sank 5 points outright.

They were changing hands at 65.5 versus a stock price of $31.38 in the late afternoon.

There was $12 million in reported volume.

Bandwidth’s stock traded to a low of $31.21 and a high of $41.30 before closing the day at $31.56, a decrease of 32.10%.

While the company reported a large earnings beat, guidance was well below expectations.

The communications platform reported earnings of 9 cents per share versus analyst expectations for losses of 13 cents.

Revenue was $216.13 million versus analyst expectations for revenue of $119.06 million.

However, the company projected losses of 11 cents to 7 cents in the first quarter with revenue of $125 million to $127 million.

Analysts had expected earnings of 7 cents on revenue of $129.66.

Snap volatile

Snap’s 0.125% convertible notes due 2028 were volatile alongside stock during Thursday’s session.

The notes dropped below par and traded to their lowest level since hitting the secondary space on Feb. 9.

The notes were down about 2 points outright early in the session.

They were changing hands at 98.625 versus a stock price of $36.54 about one hour after the opening bell, according to a market source.

However, they pared their losses as stock rebounded and were trading at 100.25 versus a stock price of $37.35 in the late afternoon.

There was $11 million in reported volume.

While Snap’s stock opened down more than 5%, it shot into positive territory as the session progressed.

Snap’s stock traded to a low of $34.95 and a high of $39.05 before closing the day at $38.83, an increase of 5%.

Mentioned in this article:

Bandwidth Inc. Nasdaq: BAND

Expedia Inc. Nasdaq: EXPE

Peabody Energy Corp. NYSE: BTU

Snap Inc. NYSE: SNAP

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