Morning Commentary: Summit Hotel convertibles upsized, trade up on debut; Sarepta eyed

By Abigail W. Adams

Portland, Me., Jan. 8 – The convertibles secondary space was active early in Friday’s session with new paper entering the space and major movement in the equities of some outstanding issues.

Summit Hotel Properties Inc. priced an upsized $250 million of five-year convertible notes after the market close on Thursday at par at the rich end of talk with a coupon of 1.5% and an initial conversion premium of 37.5%.

Price talk was for a coupon of 1.5% to 2% and an initial conversion premium of 32.5% to 37.5%, according to a market source.

The initial size of the offering was $200 million with a greenshoe of $30 million.

The new paper was trading up on an outright and dollar-neutral basis.

The notes traded as high as 103.5 and were changing hands at 102.75 shortly before 11 a.m. ET.

There was more than $20 million of the bonds on the tape.

Summit Hotel’s stock was changing hands at $8.69, a decrease of 0.34%, shortly before 11 a.m. ET.

Outside of the new paper, Sarepta Therapeutics Inc.’s 1.5% convertible notes due 2024 tanked on an outright basis as stock got chopped in half following disappointing results from its clinical trial for a treatment for muscular dystrophy.

The 1.5% notes were down more than 100 points outright with stock off more than 50%.

The notes were changing hands at 143 early in Friday’s session.

There was more than $30 million in reported volume early in the session.

Sarepta’s stock was changing hands at $84.04, a decrease of 50.22%, shortly before 11 a.m. ET.

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