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Morning Commentary: Winnebago convertible notes price, jump on secondary market debut
By Abigail W. Adams
Portland, Me., Jan. 19 – It was an active morning in the convertibles secondary space on Friday as the first new paper of the week made its aftermarket debut.
Winnebago Industries Inc. priced $300 million of six-year convertible notes after the market close on Thursday at the midpoint of initial talk with a coupon of 3.25% and an initial conversion premium of 30%.
Price talk was for a coupon of 3% to 3.5% and an initial conversion premium of 27.5% to 32.5% with the range tightening to a coupon of 3% to 3.25% and an initial conversion premium of 30% to 32.5% during bookbuilding due to strong demand, sources said.
Winnebago’s offering was the third new deal to price in 2024 with refinancing the use of proceeds in each offering.
The RV manufacturer repurchased $241 million in principal of its 1.5% convertible notes due 2025 for $295 million in privately negotiated transactions.
Winnebago’s new 3.25% convertible notes dominated activity in the secondary space on a muted open for equity markets.
Equity indexes were either side of unchanged early in the session with the Dow Jones industrial average up 99 points, or 0.26%, the S&P 500 index up 0.30%, the Nasdaq Composite index up 0.44% and the Russell 2000 index down 0.43% shortly before 11 a.m. ET.
Winnebago’s 3.25% convertible notes posted large gains on an outright and dollar-neutral basis as stock dropped early in the session.
The 3.25% convertible notes traded as high as 103.125 early in the session with swap trades accounting for the lion’s share of activity in the name, a source said.
The notes expanded about 2.5 points dollar-neutral, a source said.
Winnebago’s stock traded down to $65.99, a decrease of 2.44%, shortly before 11 a.m. ET.
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