fuboTV eyed; Marriott Vacations prices, expands on debut; American Airlines volatile

By Abigail W. Adams

Portland, Me., Jan. 28 – The convertibles primary market continued to roll out offerings on Thursday as equity markets recovered from Wednesday’s bloodletting.

fuboTV plans to price $350 million of five-year convertible notes after the market close on Thursday.

The deal looked cheap based on underwriters’ assumptions.

However, with the company’s stock heavily shorted, there were concerns about the “reddit army” taking aim at the company.

Meanwhile, the secondary space saw another active session on Thursday with new paper entering the space and wild swings in the equities of some convertible issuers.

Marriott Vacations Worldwide Corp.’s newly priced 0% convertible notes due 2026 were in focus.

While the notes were trading up on an outright and dollar-neutral basis, they were coming in from the heights reached early in the session.

American Airlines Group Inc.’s 6.5% convertible notes due 2025 were volatile as retail traders zeroed in on the struggling airline’s stock, causing it to shoot up as much as 22% early in the session.

fuboTV in focus

fuboTV plans to price $350 million of five-year convertible notes after the market close on Thursday with price talk for a coupon of 3% to 3.5% and an initial conversion premium of 42.5% to 47.5%, according to a market source.

The deal was heard to be in the market with assumptions of 650 basis points over Libor and a 45% vol.

Using those assumptions, the deal looked 3.8 points cheap at the midpoint of talk, a source said.

The deal was well-received during bookbuilding, a source said.

However, the name had a tremendous amount of short interest.

“Who knows if you’re going to be able to keep the borrow,” a source said.

Heavily shorted names typically have difficult borrows.

But they are now a cause of trepidation given the ongoing battle between short-sellers and retail investors who have purposely driven up stock prices to cause a short-squeeze.

“I’m not sure how that’s going to play out with the Reddit army,” another source said.

After spiking as high as $49.88 early in the session, fuboTV’s stock closed the day at the session low of $39.85, a decrease of 14.61%.

Marriott Vacations prices

Marriott Vacations priced $500 million of five-year convertible notes after the market close on Wednesday at par with a coupon of 0% and an initial conversion premium of 40%.

Despite the carnage in equity markets on Wednesday, the Orlando, Fla.-based global vacation company priced at the rich end of initial talk for a coupon of 0% to 0.5% and richer than initial talk for an initial conversion premium of 32.5% to 37.5%, according to a market source.

The new paper was strong out of the gate but came in as the session progressed.

“They were off to the races, but then they got stuck in the mud,” a source said.

The convertibles traded as high as 102.25 bid early in the session.

They were changing hands around 101.5 mid-morning with stock up a little over 2%.

The notes expanded as much as 2.5 points dollar-neutral early in the day.

However, they came in as the session progressed and were seen expanded about 0.75 point dollar-neutral in the late afternoon.

Marriott’s stock traded to a low of $122.86 and a high of $128.60 before closing the day at $127, an increase of 4.02%.

American Airlines volatile

American Airlines’ 6.5% convertible notes due 2025 were volatile in active trading as the embattled airline became the latest target of retail traders pouring into heavily shorted names.

The 6.5% notes traded as high as 154 early in the session as stock spiked up as much as 22%.

They contracted 2 points dollar-neutral early in the session. Holders who had the notes on hedge worried if they would lose their borrow, a source said.

However, the notes traded down to 139 in the late afternoon as stock came in and the notes expanded 1 point dollar-neutral.

American Airlines’ stock traded to a high of $21.77 and a low of $16.82 before closing the day at $18.10, an increase of 9.3%.

American Airlines reported fourth-quarter earnings prior to the market open on Thursday.

However, the jump in stock was attributed to retail traders with the airline one of the targets of the “Reddit army.”

The airline’s stock is one of the most heavily shorted in the industry, CNBC reported.

Mentioned in this article:

American Airlines Group Inc. Nasdaq: AAL

fuboTV NYSE: FUBO

Marriott Vacations Worldwide Corp. NYSE: VAC

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