Tuesday, May 19, 2009

It's a BAC Attack!

Color from a dealer friend of mine:

This BAC secondary started as a reverse inquiry for a pfd exchange from four hedge funds. These funds owned the BAC 8 and 8.125s and had bought them in the 30s, by doing the exchange now with stock price higher they didnt have to wait and do the exchange with BAC later even at 90. BAC takes their exchange at whatever terms, call it 80 on pfd vs 300m in stock at $10 (those numbers are generalities, not specifics). This is new stock in conversion and dilutive like the C exchange. Now BAC takes their $10 bid for "multiple hundreds of millions of shares" and hits the street to raise money along side at those prices from their ATM offering which everyone assumes would be cleaned up as the street chatter goes. The book builds and they do clean up the ATM but they also are issuing new dilutive stock along side.

BAC closed 11.25, after market trading 10.62

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