Rocket Lab hits new heights; Snap, Porch buy back convertibles; EchoStar drops exchange

By Abigail W. Adams

Portland, Me., Feb. 12 – The convertibles primary market was dormant on Monday although convertible issuers were actively working to address their looming maturities with several refinancing transactions announced.

Less than one week after Snap Inc.’s stock plunged on earnings results, the social media company announced a privately negotiated buyback of its 0.25% convertible notes due 2025 and 0.75% convertible notes due 2026.

Porch Group Inc. announced a privately negotiated transaction to repurchase $8 million in principal of its 0.75% convertible notes due 2026 for $3 million.

In the latest development in the ensuing investor battle with EchoStar Corp., EchoStar announced the cancellation of its exchange offer for DISH Network Corp.’s 0% convertible notes due 2025 and 3.375% convertible notes due 2026 with the minimum tender condition for the exchange not satisfied.

DISH’s convertible notes were not active on the news with the anticipated legal action of DISH DBS Corp. creditors over EchoStar’s mid-January asset reshuffle complicating their trading.

While the refinancing activity announced on Monday did not involve new issuance, market players still expect an active pipeline driven by refinancing needs.

Meanwhile, it was a quiet day in the secondary space with equity markets mixed on the eve of the latest Consumer Price Index report set for release on Tuesday.

The Dow Jones industrial average closed Monday up 126 points, or 0.33%, the S&P 500 index closed down 0.09%, the Nasdaq Composite index closed down 0.30% and the Russell 2000 index closed up 1.75%.

There was $87 million in reported volume about one hour into the session and $400 million on the tape in the late afternoon with investment-grade issues continuing to drive volume in the space.

However, Rocket Lab USA Inc.’s recently priced 4.25% convertible notes due 2029 continued to shoot higher as stock popped early Monday on an analyst upgrade.

Snap’s buyback

Snap announced a privately negotiated buyback of its 0.25% convertible notes due 2025 and 0.75% convertible notes due 2026 early Monday, less than one week after the company’s convertible notes suffered losses as stock plunged on disappointing earnings.

The camera and social media company announced that it would repurchase $100 million in principal of its 0.25% convertible notes due 2025 for $97.8 million and $351.2 million in principal of its 0.75% convertible notes due 2026 for $336.4 million in privately negotiated transactions.

The 0.75% convertible notes were lifted by the buyback.

The 0.75% convertible notes added about 2.5 points outright.

They were seen on Trace at 96.5 early in the session and 96.125 in the late afternoon, sources.

Snap’s other tranches were not active on Monday.

Snap’s stock traded to a low of $11.20 and a high of $12.08 before closing at $11.64, an increase of 4.77%.

The 0.75% convertible notes fell about 14 points outright and contracted 0.5 point on hedge last Wednesday as stock plunged a little more than 34% following earnings.

The 0.25% convertible notes due 2025 fell 9 points outright and contracted about 0.25 point dollar-neutral.

Porch’s buyback

Porch group announced on Monday a privately negotiated transaction to repurchase $8 million in principal of its 0.25% convertible notes due 2026 for $3 million.

The repurchase price was 37.5, according to a company news release.

The buyback reduced the outstanding principal amount of the 0.25% notes to $217 million from $225 million.

Proch’s 0.75% convertible notes have been in deeply distressed territory for most of 2023. The notes were trading on a 27-handle in December 2023.

However, they bounced to a 36-handle the previous week in the run up to the buyback, according to Trace data.

Rocket Lab’s new high

Rocket Lab’s 4.25% convertible notes due 2029 continued to shoot higher on Monday as stock soared following an analyst upgrade.

The 4.25% notes added 7 points outright with stock up more than 9% early in the session.

The convertibles were trading at 115.125 versus a stock price of $4.72 shortly before 11 a.m. ET.

The notes came in alongside stock to trade at 114.375 versus a stock price of $4.66 in the late afternoon.

The notes improved on hedge on the move up.

There was $12 million in reported volume.

Rocket Lab’s stock traded to a low of $4.44 and a high of $4.79 before closing at $4.72, up 8.76%.

Stock surged after a Citi analyst reinstated coverage of the stock with a “buy” rating and a $6 price target.

Mentioned in this article:

EchoStar Corp. Nasdaq: SATS

Porch Group Inc. Nasdaq: PRCH

Rocket Lab USA Inc. Nasdaq: RKLB

Snap Inc. NYSE: SNAP

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