Morning Commentary: Caliber Home Loans convertible notes on deck; Snap skyrockets

By Abigail W. Adams

Portland, Me., Oct. 21 – The convertibles primary market returned to action on Wednesday with a small convertible preferred offering on deck.

Caliber Home Loans Inc. plans to price $100 million three-year par of $50 convertible preferreds after the market close on Wednesday with price talk for a dividend of 6% to 6.5% and a threshold appreciation price of 17.5% to 22.5%, according to a market source.

The convertible preferreds are pricing alongside Caliber’s initial public offering of 23 million shares, which are talked at a public offering price of $14.00 to $16.00.

The offering from the Texas-based mortgage lender comes on a strong day for equity markets as equity benchmarks rallied on renewed hope for a stimulus package.

Snap Inc.’s convertible notes were in focus in the secondary space with the notes skyrocketing on an outright basis and expanded dollar-neutral on the heel of the company’s third-quarter earnings, which crushed analyst expectations.

Both tranches were up more than 20 points outright as stock rocketed up almost 30%.

Snap’s 0.25% convertible notes due 2025 traded up 28 points outright to 178.375 early in the session.

Snap’s 0.75% convertible notes due 2026 gained 25 points outright to trade at 171.5.

The notes were expanding on the move up, a source said.

Snap’s stock traded up to $37.53, an increase of 31.78%, shortly before 11 a.m. ET.

Stock reached its highest level on Wednesday since the company’s 2017 IPO.

The camera and social media company reported a profit of 1 cent per share versus analyst expectations for a loss per share of 5 cents.

Revenue was $679 million versus analyst expectations for revenue of $557 million.

The company also reported 11 million new daily active users versus analyst expectations for 5 million new daily active users, MarketWatch reported.

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