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Morning Commentary: Porch exchanges convertibles, sells new notes; secondary quiet
By Abigail W. Adams
Portland, Me., April 17 – While no new deals launched early in Monday’s session, the convertibles primary market remained active with new paper issued through privately negotiated exchanges – something sources expect to become a growing trend.
Porch Group Inc. priced $333,334,000 of 6.75% convertible notes due 2028 on Monday as part of a privately negotiated exchange for $200 million in principal for its 0.75% convertible notes due 2026.
The deal most likely had a captive audience as Porch’s 0.75% convertible notes due 2026 had been trading at distressed levels, a source said.
Holders of the old notes were rolled into the 2028 notes on a 1:1 basis with the 2028 notes carrying the same conversion rate and conversion price of the 2026 notes to prevent further dilution to the ailing home services professional software company, a source said.
Porch’s new 6.75% convertible notes due 2028 were not active early in Monday’s session with the secondary space again quiet and flat on a mixed morning for equities.
The Dow Jones industrial average was up 25 points, or 0.07%, the S&P 500 index was down 0.03%, the Nasdaq Composite index was down 0.07% and the Russell 2000 index was up 0.65% shortly after 11 a.m. ET.
There was $40 million in reported volume about one hour into the session with Porch’s 0.75% convertible notes due 2026 the top traded as the company repurchases them at par.
The notes had been trading in the mid-50s, a source said.
No name outside of Porch saw more than $5 million in reported volume about one hour into the session.
However, Guess? Inc.’s new 3.75% convertible notes due 2028, which were issued the previous week as part of an exchange for its 2% convertible notes due 2024, remained strong.
The 3.75% notes were changing hands at 103.25 versus a stock price of $19.66 in thin volume, a source said.
Guess?’s stock was seen at $19.72, an increase of 1.54%, shortly after 11 a.m. ET.
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