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Morning Commentary: Vertex convertibles in focus, gain on debut; Enphase notes active
By Abigail W. Adams
Portland, Me., Oct. 27 – The convertibles secondary space saw an uptick of activity on Wednesday with the first new paper in three weeks hitting the aftermarket.
Vertex Energy Inc. priced $155 million of six-year convertible notes after the market close on Tuesday at 90 with a coupon of 6.25% and an initial conversion premium of 37.5%.
Pricing came in line with price talk for a discounted offer price of 90 and at the midpoint of talk for a coupon of 6% to 6.5% and an initial conversion premium of 35% to 40%, according to a market source.
The new paper was active, despite the small size of the issue, and making large outright gains.
The 6.25% notes were changing hands at 98 early in the session.
They expanded 4 points dollar-neutral.
There was $25 million in reported volume.
Vertex’s stock traded up to $4.56, an increase of 6.78%, shortly before 11 a.m. ET.
Meanwhile, earnings-related volatility sparked activity in some outstanding issues.
Enphase Energy Inc.’s convertible notes were in focus and posting gains on an outright basis as stock surged following a large earnings beat.
Enphase’s 0% convertible notes due 2026 jumped 5.75 points outright with stock up 23%.
The notes were changing hands at 105.25 versus a stock price of $210.91 early in the session.
There was about $12 million in reported volume a little over one hour into the session.
Enphase’s stock was changing hands at $213.73, an increase of 23.22%, shortly before 11 a.m. ET.
Enphase reported earnings per share of 60 cents versus analyst expectations for earnings of 49 cents.
Revenue was $352 million versus analyst expectations for revenue of $345 million.
The solar energy company also provided upbeat guidance with record revenue of $390 million to $410 million expected in the fourth quarter.
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