Midday Commentary: Peabody Energy adds on earnings; Aegean Marine Petroleum to price small deal

By Rebecca Melvin

New York, Oct. 17 - Peabody Energy Corp.'s 4.75% convertibles due 2066 traded up a point or two on Thursday to as much as 84 after the St. Louis-based coal mining company reported earnings that beat estimates and guided above estimates for full year 2013. Peabody shares were also pushing higher in early action.

Also in focus was a new deal, albeit a small one, from Aegean Marine Petroleum Network Inc. The Athens, Greece-based marine fuel logistics company plans to price $75 million of five-year convertible senior notes after the market close.

The registered deal was talked to yield 4% to 4.5% with an initial conversion premium of 30% to 35%.

One trader suggested that the assumptions to make a valuation on the deal would be about 1,000 basis points over Libor and a 38% to 40% vol. He chose the inputs due to the fact that it's a company with a small market capitalization of $514 million and because it is already levered and burning cash.

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