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Morning Commentary: Red Hat active on earnings; Landmark convertible preferreds on tap
By Abigail W. Adams
Portland, Me., March 27 – Red Hat Inc.’s 0.25% convertible notes due 2019 were active and making gains alongside its stock after the Raleigh, N.C.-based software company reported fourth-quarter and year-end earnings results for fiscal year 2018.
The 0.25% convertible notes climbed more than 10 points on an outright basis early in Tuesday’s session. The notes were seen trading at 215 versus an equity price of $158.00, an increase of 3.7%.
With about $24 million on the tape, the 0.25% convertible notes were the top volume mover of the day so far.
Red Hat reported non-GAAP earnings of 91 cents per share on revenue of $772 million for the fourth-quarter of fiscal 2018, which beat analyst expectations of 81 cents per share on $762 million in revenue. Non-GAAP earnings per share for fiscal year 2018 was $2.98.
Red Hat expects revenue of $3.425 billion to $3.46 billion for fiscal year 2019 with non-GAAP earnings per share of $3.38 to $3.41, according to a company news release.
Meanwhile, the primary market is preparing a new offering of convertible preferred units.
Landmark Infrastructure Partners LP plans to price a $50 million offering of $25-par series C floating-to-fixed rate cumulative perpetual redeemable convertible preferred units after the market close on Tuesday with price talk for a rate of Libor plus 420 bps to Libor plus 470 bps, which equals an implied dividend of 6.5% to 7%, according to a market source.
The initial conversion premium is fixed at 15%, according to a market source.
The convertible preferred units will float for the first seven years and then switch to a fixed dividend of 9%, according to a market source.
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