Greenbrier trades up on debut; investment-grade convertibles in focus; DraftKings lower

By Abigail W. Adams

Portland, Me., April 16 – New convertibles paper was in focus on Friday with the last, and one of the only, deals of the week hitting the secondary space.

Greenbrier Cos., Inc. priced an upsized $325 million of seven-year convertible notes after the market close on Thursday.

The deal brought the weekly tally for new paper to $1.075 billion, which priced over two deals.

However, Greenbrier’s new paper was the only convertible bond deal with the other deal of the week NiSource Inc.’s $750 million offering of three-year par-of-$100 equity units.

While Bally’s Corp. had planned to price a $250 million offering of three-year par-of-$50 equity units, the deal was canceled, which sources found odd.

With new paper in the market, it was a relatively active day for a Friday, sources said.

Greenbrier’s new notes were strong on debut with the notes trading up on an outright and dollar-neutral basis.

Outside of the new paper, investment-grade convertible notes dominated the tape with the higher quality credits favored by buyers.

Expedia Group Inc.’s 0% convertible notes due 2026 (Baa3/BBB-/BBB-) continued to see high volume with the notes one of the few recent deals that priced with a 0% coupon to perform well in the aftermarket.

DraftKings Inc.’s 0% convertible notes due 2028, in contrast, continued their downward spiral with the notes continuing to contract in active trading.

Greenbrier gains

Greenbrier priced an upsized $325 million of seven-year convertible notes after the market close on Thursday at par with a coupon of 2.875% and an initial conversion premium of 30%.

Pricing came at the cheap end of talk for a coupon of 2.375% to 2.875% and an initial conversion premium of 30% to 35%, according to a market source.

The greenshoe was also upsized to $48.75 million.

The initial size of the offering was $275 million with a greenshoe of $41.25 million.

The new paper was putting in a strong performance on debut.

The notes traded up to 102 on an outright basis with stock up a little over 1% early in the session, according to a market source.

It continued to trade on a 102-handle heading into the afternoon.

The notes expanded upwards of 1.75 points dollar-neutral.

Greenbrier’s stock traded to a high of $44.14 and a low of $42.59 before closing the day at $43.80, an increase of 2.77%.

Concurrently, the company repurchased $207.1 million of its 2.875% convertible notes due 2024 for $228.4 million in cash in privately negotiated transactions.

There were several prints of the 2.875% notes due 2024 on Friday at 109.397, according to Trace data.

Expedia active

Expedia’s 0% convertible notes due 2026 continued to see heavy volume on Friday with the notes gaining on an outright basis alongside stock.

The 0% notes were up about 1 point outright with stock up a little over 1%, sources said.

They were changing hands at 109 in the late afternoon.

Expedia’s stock traded to a high of $174.77 and a low of $170.98 before closing the day at $173.91, an increase of 1.97%.

The 0% notes are one of the few No-Nos, or 0% convertible bonds that priced at par, to price in recent months that have performed well in the aftermarket.

DraftKings weakens

DraftKing’s 0% convertible notes due 2028 continued to trend lower in active trading on Friday.

The notes were changing hands at 95.25 in the late afternoon.

They were down another 0.125 point dollar-neutral, a source said.

“It seems like they get weaker every day,” a source said.

DraftKings’ stock traded to a high of $59.98 and a low of $57.83 before closing the day at $57.98, an increase of 0.87%.

Mentioned in this article:

Bally’s Corp. NYSE: BALY

DraftKings Inc. Nasdaq: DKNG

Expedia Group Inc. Nasdaq: EXPE

Greenbrier Cos., Inc. NYSE: GBX

NiSource Inc. NYSE: NI

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