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Morning Commentary: Vertex Energy convertible notes on deck; DraftKings gains outright
By Abigail W. Adams
Portland, Me., Oct. 26 – After almost three weeks of no new deal activity, the convertibles primary market has one small offering on deck.
Vertex Energy Inc. plans to price $155 million of six-year convertible notes after the market close on Tuesday with price talk for a discounted offer price of 90, a coupon of 6% to 6.5% and an initial conversion premium of 35% to 40%, according to a market source.
The offering was wall-crossed, a source said.
Meanwhile, the secondary space was again slow early in Tuesday’s session as equities extended their gains with earnings coming in better than expected.
The Dow Jones industrial average was up 100 points, or 0.28%, the S&P 500 index was up 0.66%, the Nasdaq Composite was up 1% and the Russell 2000 index was up 0.23% shortly before 11 a.m. ET.
There was $70.5 million in reported volume a little over one hour into the session with few names seeing concentrated trading activity.
DraftKings Inc.’s 0% convertible notes due 2028 saw renewed attention in the secondary space with the notes gaining outright as stock surged after the company announced it was scrapping a planned acquisition.
The 0% convertible notes rose about 2.375 points outright with stock up 7%.
The notes were changing hands at 89.625 versus a stock price of $50.07 early in the session.
DraftKings’ stock was trading at $50.04, an increase of 6.94%, shortly before 11 a.m. ET.
Stock surged after the sports betting operator announced it was dropping its bid for Entertain plc.
DraftKings’ takeover bid was valued at $22.4 billion, Bloomberg reported.
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