Morning Commentary: Peabody Energy’s upsized convertible notes price, jump on debut

By Abigail W. Adams

Portland, Me., Feb. 25 – New convertibles paper was in focus on Friday as the first new deal of the week hit the secondary space amid continued volatility in equities.

Peabody Energy Corp. priced an upsized $275 million offering of six-year convertible notes after the market close on Thursday at par with a coupon of 3.25% and an initial conversion premium of 32.5%.

Pricing came at the midpoint of talk for a coupon of 3% to 3.5% and an initial conversion premium of 30% to 35%.

The new paper skyrocketed on debut as equities continued to waver between gains and losses.

The notes traded as high as 103 out of the gate.

They were changing hands around 102 about an hour into the session.

The notes expanded 2.5 points dollar-neutral.

Peabody Energy’s stock was trading at $14.87, a decrease of 0.70%, shortly before 11 a.m. ET.

Peabody Energy is the largest coal company in the world.

While coal as an energy producer has largely fallen out of favor with investors, the energy crisis expected due to Russia’s invasion of the Ukraine helped bolster the notes, a source said.

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