Morning Commentary: Redwood Trust convertible notes pricing Monday; topical names quiet

Chicago, June 6 – Redwood Trust Inc. will be pricing $150 million of five-year convertible senior notes after the market close on Monday, according to information from a market source.

J.P. Morgan Securities LLC is listed as the bookrunner for the offering, which comes with price talk for a coupon of 7.5% to 8% with an initial conversion premium of 10% to 15%.

The notes have three years of call protection. There is also dividend protection over $0.23 per share as part of the deal.

The company has several convertible bonds outstanding with its 5.625% convertible bonds due July 15, 2024 the most liquid of the group.

The existing issue had some minor trades on Monday morning with the new convertible notes in the offing but opened the day basically unchanged at 98.75, the level they were trading at on Friday late afternoon.

Musk balks

Twitter Inc.’s stock was on the move again as a volume leader on Monday morning after Elon Musk did more to cast doubt on his eventual takeover of the company, accusing Twitter of a material breach through a lack of disclosure regarding bots on the company’s site.

Even though stock trended lower by around 3.5% – the news that the deal could be off, once again, did less than nothing to jolt the price on Twitter’s zero-coupon notes due 2026.

Tesla Inc.’s shareholders were also busy reacting to the news with the stock opening Monday higher, trading at $710.80 midmorning after having closed Friday at $703.55.

Similarly, though, bondholders were unfazed with a lack no movement in Tesla’s 2% notes due 2024.

SolarEdge in focus

SolarEdge Technologies, Inc., which has a reasonably liquid issue in its zero-coupon convertible senior notes due in September 2025, has found stable ground just above 130.

The notes had dipped since mid-April, trading as low as 110 at one point, before steadily moving up with stock recently.

Stock was up around 4% on Monday morning as the White House announced a two-year pause on new tariffs for the solar industry, a news item that positively impacts the Israel-based company.

The first trade on Monday morning was nearly 133 with the second trade at 131. Those levels were last achieved April 20.

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