Secondary tone improves; Peabody jumps on debut; LivePerson, Opendoor down; Etsy gains

By Abigail W. Adams

Portland, Me., Feb. 25 – It was an active day in the convertibles secondary space on Friday with new paper entering the market for the first time in almost two weeks.

Peabody Energy Corp. priced an upsized $275 million offering of six-year convertible notes after the market close on Thursday.

The convertible notes jumped on an outright and dollar-neutral basis on debut.

The new paper entered a secondary space with a dramatically improved tone as the rally in equity markets continued.

The Dow Jones industrial average closed the day up 834 points, or 2.51%, the S&P 500 index closed up 2.24%, the Nasdaq Composite closed up 1.64% and the Russell 2000 index closed up 2.25%.

While Russia continues its military offensive in the Ukraine and the Federal Reserve’s rate hike schedule remains intact, a risk-on sentiment returned to the market.

There is an old adage on Wall Street – sell when the sabers rattle, buy when there’s the first shot, a source said.

While overall markets were strong, several convertible issuers saw outsized moves to the downside in their equity following earnings.

LivePerson Inc.’s 0% convertible notes due 2026 were in focus with the already struggling convertible notes sinking further as stock tanked following earnings.

Opendoor Technologies Inc.’s 0.25% convertible notes due 2026 were also down in active trading as stock tanked post-earnings.

However, Etsy Inc.’s 0.25% convertible notes due 2028 were on the rise as stock shot up double digits following its earnings report.

Peabody jumps

Peabody Energy priced an upsized $275 million offering of six-year convertible notes after the market close on Thursday at par with a coupon of 3.25% and an initial conversion premium of 32.5%.

Pricing came at the midpoint of talk for a coupon of 3% to 3.5% and an initial conversion premium of 30% to 35%.

The greenshoe was also upsized to $45 million. The initial size of the offering was $250 million with a greenshoe of $37.5 million.

The new paper skyrocketed on debut but came in as the session progressed.

The notes traded as high as 103 out of the gate.

However, they were wrapped around 102 as the session progressed.

The notes expanded 2.5 points dollar-neutral early in the session. They were seen up 1 point on swap in the late afternoon.

Peabody Energy’s stock traded to a low of $14.34 and a high of $16.03 before closing the day at $16.01, an increase of 6.91%.

Peabody Energy is the largest coal company in the world.

Proceeds will be used to redeem the full outstanding $62.618 million of the company’s 8.5% senior secured notes due 2024 and a portion of its 6.375% senior secured notes due 2025.

Coal companies have had a difficult time accessing the high-yield market for financing in recent years with several accounts adopting mandates that no longer allow them to invest in carbon-producers, a source said.

However, the energy crisis expected due to Russia’s invasion of the Ukraine helped bolster demand for the convertible notes, another source said.

LivePerson under pressure

While equity markets extended their rally on Friday, several convertible issuers saw outsized moves to the downside following earnings.

LivePerson’s 0% convertible notes due 2026 fell further as stock tanked double digits following earnings.

The notes fell about 3.5 points outright. They were changing hands at $71.478 versus a stock price of $17.99 in the late afternoon.

The notes contracted 1 point dollar-neutral on the move down, a source said.

There was $28 million in reported volume heading into the market close.

LivePerson’s stock traded to a high of $19 and a new 52-week low of $16 before closing the day at $18.10, a decrease of 25.64%.

The AI company reported mixed earnings with losses per share of 22 cents beating analyst expectations for losses of 48 cents.

However, revenue of $123.80 million came in slightly below expectations for revenue of $123.88 million.

The company saw an onslaught of price target cuts and analyst downgrades following earnings.

Opendoor down

Opendoor Technologies’ 0.25% convertible notes due 2026 sank on an outright and dollar-neutral basis as stock tanked following earnings.

The 0.25% convertible notes were down 6 points outright with stock off 20%.

The notes were changing hands at 76.125 versus a stock price of $8.15 in the late afternoon, according to a market source.

They contracted 1.5 points dollar-neutral.

The online real estate company’s stock traded to a high of $9.83 and a low of $7.77 before closing the day at $8.44, a decrease of 23.13%.

Opendoor reported losses per share of 13 cents versus the losses of 10 cents expected.

However, revenue of $3.82 billion beat expectations for revenue of $3.17 billion.

Etsy’s earnings

Etsy’s 0.25% convertible notes due 2028 were on the rise as stock jumped double digits following a large earnings beat.

The 0.25% convertible notes were up 4 points outright with stock up 16%.

The 0.25% notes were changing hands at 95.75 versus a stock price of $144.82 in the late afternoon, according to a market source.

There was $23 million in reported volume.

Etsy’s stock traded to a low of $131.25 and a high of $152.23 before closing the day at $148.94, an increase of 16.21%.

Stock jumped after the company reported earnings per share of $1.43 versus analyst expectations for earnings of 98 cents. Revenue was $717.14 million versus the $685.45 million expected.

Mentioned in this article:

Etsy Inc. Nasdaq: ETSY

LivePerson Inc. Nasdaq: LPSN

Opendoor Technologies Inc. Nasdaq: OPEN

Peabody Energy Corp. NYSE: BTU

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.