Kadmon convertible notes on tap; Spire trades up on debut; Peloton, Twitter improve

By Abigail W. Adams

Portland, Me., Feb. 10 – The convertibles primary market continued to roll out new offerings on Wednesday with one overnight deal on deck.

Kadmon Holdings Inc. plans to price $150 million of six-year convertible notes prior to the market open on Thursday with price talk for a coupon of 3.25% to 3.75% and an initial conversion premium of 25% to 30%, according to a market source.

Cantor Fitzgerald & Co. is the bookrunner for the Rule 144A offering, which carries a greenshoe of $30 million.

The deal is the sole offering on the calendar after Spire Inc. priced an upsized $160 million three-year $50-par equity units after the market close on Tuesday.

While Spire’s deal played to a limited audience, it was performing well on its aftermarket debut.

The secondary space was active on Wednesday with $155 million on the tape about one hour into the session and more than $1.1 billion in reported volume at the market close, according to market sources.

“It’s a lift-a-thon out there,” a source said.

The overall market was expanding as equities wavered between gains and losses with investors continuing to put money to work in the space.

Peloton Interactive Inc.’s 0% convertible notes due 2026 continued to dominate the tape with the notes again on the rise.

Twitter Inc.’s convertible notes were also in focus and making gains on an outright and dollar-neutral basis as stock broke out to a new 52-week high on the heels of its highly anticipated fourth-quarter earnings report.

Spire trades up

Spire priced an upsized $160 million three-year $50-par equity units after the market close on Tuesday at the rich end of talk with a dividend of 7.5% and a threshold appreciation premium of 22.5%.

Price talk was for a dividend of 7.5% to 8% and a threshold appreciation premium of 17.5% to 22.5%, according to a market source.

The initial size of the offering was $150 million.

The units were performing well on debut.

They were marked at $51.25 bid, $51.75 offered versus a stock price of $64.50 early in the session.

The units came in slightly as the session progressed and were trading around $51 in the late afternoon, a source said.

Spire’s stock traded to a high of $64.99 before closing the day at an intrasession low of $63.22, a decrease of 1.59%.

Peloton day two

Peloton’s 0% convertible notes due 2026 continued to dominate the tape on Wednesday with the notes peddling higher.

The 0% notes were changing hands at 107.5 on an outright basis about one hour into the session and closed the day at 107.625, sources said.

They again expanded on a dollar-neutral basis.

There was more than $66 million of the bonds on the tape.

Peloton’s stock traded to a high of $150.50 and a low of $143.45 before closing the day at $145.04, a decrease of 1.84%.

The notes have made large gains on an outright and dollar-neutral basis since hitting the secondary space on Tuesday.

They rose more than 6 points outright and 5.5 points dollar-neutral on their aftermarket debut.

Twitter on the rise

Twitter’s convertible notes were active on Wednesday and making large gains on an outright and dollar-neutral basis following the social media company’s fourth-quarter earnings reports.

Twitter’s 0.25% convertible notes due 2024 rose 11 points outright with stock up more than 13%.

They were changing hands at 141.125 versus a stock price of $67.80 heading into the market close, a source said.

There was more than $41 million of the bonds on the tape.

Twitter’s soon-to-mature 1% convertible notes due Sept. 15, 2021 rose 4 points.

They were changing hands at 108 versus a stock price of $67.90 heading into the close.

It was the highest outright level for the notes since they priced in 2015.

They saw more than $25 million in reported volume.

The notes expanded on the move up, a source said.

Twitter’s stock traded to a low of $63.20 and a new 52-week high of $69.25 before closing the day at $67.77, an increase of 13.16%.

Stock spiked after the company reported earnings per share of 38 cents versus analyst expectations for earnings of 29 cents.

Revenue of $1.29 billion also blew past analyst expectations for revenue of $1.18 billion.

Mentioned in this article:

Kadmon Holdings Inc. Nasdaq: KDMN

Peloton Interactive Inc. Nasdaq: PTON

Spire Inc. NYSE: SR

Twitter Inc. NYSE: TWTR

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