Morning Commentary: Pebblebrook convertibles hit the aftermarket, expand on debut

By Abigail W. Adams

Portland, Me., Dec. 11 – The last new convertible bond deal of the week hit the aftermarket on Friday.

Pebblebrook Hotel Trust priced an upsized $450 million of six-year convertible notes after the market close on Thursday at par with a coupon of 1.75% and an initial conversion premium of 35%.

Pricing came at the rich end of talk for a coupon of 1.75% to 2.25% and at the midpoint of talk for an initial conversion premium of 32.5% to 37.5%, according to a market source.

While the offering was upsized, the greenshoe was downsized to $50 million.

The initial size of the offering was $350 million with a greenshoe of $52.5 million.

The deal was performing well in the aftermarket.

The notes gained 2.5 points on a dollar-neutral, or hedged, basis.

“They’re doing well despite the upsize,” a source said.

Pebblebrook stock traded down to $18.59, a decrease of 1.48%, shortly before 11 a.m. ET.

Outside of the new paper, the secondary space was quiet early Friday, the source said.

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