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Morning Commentary: Spirit Realty convertibles edge higher as upgrade action continues
By Rebecca Melvin
New York, April 26 – Spirit Realty Capital Inc.’s convertibles remained actively traded early Tuesday and pricing was on the rise for the Scottsdale, Ariz.-based real estate investment trust’s two convertible bond issues in ongoing action related to corporate credit rating upgrades.
Spirit announced that it has received an investment-grade rating from Fitch Ratings, which assigned the company a first time rating of BBB- with a stable outlook. That rating move comes on the heels of Standard & Poor’s corporate credit rating upgrade on Friday.
S&P upgraded the corporate credit rating on Spirit Realty to BBB- from BB+, saying the upgrade primarily reflected the REIT’s recently upsized equity issuance, which resulted in net proceeds of $369 million. The new equity modestly lowered leverage and is also expected to accelerate the pace of unencumbering the company’s asset base.
Spirit Realty’s 2.875% convertible due 2019 moved up to 104.20 from about 103 on Monday, according to Trace data. The bonds had been around par before the upgrade.
Spirit Realty’s 3.75% convertibles due 2020 traded up to 107 in the early going, up from about 105 late Monday, according to Trace data. And that is up from about 101 to 102 ahead of the news.
Spirit shares were up fractionally early Tuesday at about $11.30.
Elsewhere, Molina Healthcare Inc.’s 1.625% convertibles due 2044 looked like they might take another leg higher. The bond changed hands at 128.125 early Tuesday, and that is higher from 122.5 on Friday.
Molina shares were at $66.29. They have been running higher since Thursday.
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