TAL Education adds after earnings beat; Echo Logistics, A. Schulman deals look cheap

By Rebecca Melvin

New York, April 28 – U.S. convertibles trading action saw something of a pickup on Tuesday but was still subdued considering the number of earnings reports that hit the news tape.

One trader said that none of the names he follows had traded differently on the back of earnings.

Earnings reports from convertibles issuers are still ramping up, so more active trading is anticipated later this week and next week, a New York-based sellsider said.

TAL Education Group’s convertibles traded higher on both an outright and dollar-neutral basis after the Beijing-based after-school tutoring services company reported earnings that beat estimates on Tuesday, the trader said.

The TAL Education 2.5% convertibles due 2019 were quoted at 147 versus an underlying share price of $38.25 at the close. Shares rose 6%.

Meanwhile in the primary market, Echo Global Logistics Inc. was looking “pretty cheap and should do well,” a Connecticut-based trader said, citing a valuation that put the deal worth 103.25 at the midpoint of talk, using a credit spread of 600 basis points over Libor and a 30% vol.

The $150 million Echo deal was launched Monday for pricing Wednesday and was talked at a 2.75% to 3.25% coupon and 27.5% to 32.5% premium.

Also A. Schulman Inc. launched a $110 million offering of cumulative perpetual convertible special stock late Monday with pricing seen after the market close Tuesday.

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