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Morning Commentary: Guess? hits the market, expands on debut; Teradyne notes active
By Abigail W. Adams
Portland, Me., April 24 – The convertibles secondary market returned to action on Wednesday with new paper occupying the focus of the space.
Guess? Inc. priced an upsized $275 million of five-year convertible notes prior to the market open on Wednesday at the rich end of talk with a coupon of 2% and an initial conversion premium of 37.5%, according to a company news release.
Price talk was for a coupon of 2% to 2.5% and an initial conversion premium of 32.5% to 37.5%, according to a market source.
While the deal size was upsized from $250 million, the greenshoe was downsized to $25 million from $37.5 million.
The new paper dominated activity in the secondary space and made large gains on an outright and dollar-neutral basis.
The 2% convertible notes were bid up 1.5 points pre-open and traded as high as 103.5 early in the session.
They were expanded 1 point dollar-neutral, a market source said.
More than $66 million was on the tape early in the session.
Guess? stock continued to make gains early Wednesday after shooting up 12% on Tuesday.
Guess? stock was $19.63, an increase of 4.69%, shortly before 11 a.m. ET.
Outside of the new paper, Teradyne Inc.’s 1.25% convertible notes due 2023 were active early in Wednesday’s session following a first-quarter earnings beat.
The 1.25% notes traded up to 160.75 early in the session with more than $13 million of the bonds on the tape.
Teradyne stock was $47.76, an increase of 7.11% shortly before 11 a.m. ET.
The automation equipment supplier company beat on both the top and the bottom lines in its earnings report.
Teradyne reported earnings per share of 54 cents, which beat analyst expectations for earnings of 44 cents.
The company reported revenue of $494.1 million in the first quarter versus analyst expectations for revenue of $476 million.
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