Caesars Entertainment convertibles gain outright, drop dollar-neutral; Tilray improves

By Abigail W. Adams

Portland, Me., Jan. 11 – The convertibles secondary space rounded out a strong week on firm footing, sources said.

There was again decent trading volume in the secondary space.

Euronet Worldwide Inc.’s 1.5% convertible notes due 2044 topped the volume charts on Friday although with little movement in price.

Caesars Entertainment Corp.’s 5% convertible senior notes due 2024 were in focus with the notes making gains on an outright basis but contracting dollar-neutral as stock jumped on news Carl Icahn was taking a stake in the casino company.

Micron Technology Inc.’s 3% convertible notes due 2043 remained active and continued to post gains on an outright basis although they were moving largely in line dollar-neutral, a source said.

Tilray Inc.’s 5% convertible notes due 2023 were also on the rise on Friday as stock catapulted on news the cannabis company’s largest stakeholder would maintain its investment in the company.

Colfax Corp.’s new 5.75% tangible equity units due 2022 continued to gain on an outright basis although the notes were moving largely in line dollar-neutral, a market source said.

Euronet active

Euronet’s 1.5% convertible notes due 2044 topped the volume charts on Friday although the notes were trading largely flat.

The 1.5% notes were changing hands around 146.75. About $24 million of the bonds were on the tape by the late afternoon.

Euronet stock closed Friday at $104.74, an increase of 0.13%.

Sources attributed the trading activity to portfolio adjustments.

Caesars contracts

Caesars Entertainment’s 5% convertible notes due 2024 were second only to Euronet in trading activity in the secondary space on Friday.

The 5% notes were making gains on an outright basis but were contracting dollar-neutral as stock soared.

The 5% notes rose more than 6 points outright to close Friday at 142.82, according to a market source.

While the notes may have improved into the afternoon, they were contracted about ½ point dollar-neutral early in the session, a market source said.

Caesars stock traded to a high of $8.93 before coming in slightly to close the day at $8.71, an increase of 9.01%.

Caesars stock soared after CNBC reported Friday that activist investor Carl Icahn was building a stake in the casino operator of an undisclosed amount.

Micron gains outright

Micron’s 3% convertible notes due 2043 continued to make gains on an outright basis in active trading during Friday’s session although the notes were largely moving in line dollar-neutral.

The notes were up 2 points outright to close the day around 126, a market source said.

More than $10 million of the bonds were on the tape by the late afternoon.

Micron stock wavered between gains and losses during Friday’s session. Micron stock was off early in the session, trading as low as $35.01 but spiking in the afternoon.

Stock traded as high as $36.73 before coming in to close the day at $36.01, an increase of 0.28%.

The 3% convertible notes have been active throughout the week with stock on the rise after two separate analyst upgrades.

Tilray improves

Tilray’s 5% convertible notes due 2023 were also on the rise on Friday as stock catapulted on news the cannabis company’s largest stakeholder would maintain its investment in the company.

The 5% convertible notes jumped about 6 points outright to 83 with the yield on the notes dropping to under 10%.

About $8 million of the bonds traded during Friday’s session.

The notes continue to be held by mostly outright players with the borrow on the stock still difficult. “There’s not great participation,” a market source said.

The borrow on the stock costs upwards of 900%, the source said.

Tilray stock traded as high as $103.69 during Friday’s session before coming in to close the day at $96.00, an increase of 19.4%.

Stock soared after Privateer Holdings, Tilray’s biggest stakeholder owning about 76% of the company’s outstanding shares, announced that it would not sell any of its holdings in the company during the first half of 2019, Bloomberg reported.

The lock-up on Tilray stock ends on Jan. 15.

However, with the largest holder announcing it would not sell its shares, the borrow on the stock is not expected to improve, a source said.

Colfax gains continue

Colfax’s new mandatory convertible notes continued to post gains their third day in the market.

The par of $100 5.75% tangible equity units due 2022 traded up to 106 during Friday’s session, a market source said.

The units were largely moving in line on a dollar-neutral basis. They remained active with more than 147,000 units changing hands.

Colfax’s common stock also continued to post gains on Friday. Common stock traded as high as $22.14 before closing the day at $21.94, an increase of 0.23%.

The tangible equity units, which priced prior to the market open on Wednesday, were in demand during bookbuilding and in the secondary space.

The notes were heard to be oversubscribed at the midpoint of talk and have expanded more than 2 points dollar-neutral since hitting the secondary space.

Mentioned in this article:

Caesars Entertainment Corp. Nasdaq: CZR

Colfax Corp. NYSE: CFX

Euronet Worldwide Inc. Nasdaq: EEFT

Micron Technology Inc. Nasdaq: MU

Tilray Inc. Nasdaq: TLRY

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