Conversion price: The 1.50 % convertible senior notes due 2030 are callable at a $30.00 per share conversion price (the fixed price at which each note can be exchanged for Pitney Bowes common stock).
Comparison to the market: At the time of the offering, PBI’s equity was trading around $19–$21 per share – roughly 30 %–40 % below the $30 conversion price. In other words, the notes are currently “out‑of‑the‑money” for conversion; holders would receive less value by converting than by simply selling the notes on the bond market.
Trading implications
- Fundamental view: The premium conversion price signals that the company expects a meaningful upside in the stock price over the next several years. If you anticipate a sustained rally (e.g., driven by a turnaround in its e‑commerce or software segments), the notes could act as a leveraged bet on equity appreciation.
- Technical view: PBI has been stuck in a broad‑based downtrend on the daily chart, with the 50‑day SMA still below the 200‑day SMA and the price hovering near the lower end of the recent range. A breakout above $30 would be a clear catalyst for conversion and could trigger short‑covering and buying pressure.
- Actionable strategy:
- If you are bullish: Consider buying the notes (or the underlying stock) now and holding the debt position as a “coupon‑paying” vehicle while the equity climbs toward the $30 conversion level.
- If you are neutral/bearish: The notes’ low conversion value makes them effectively a high‑coupon bond (1.5 % vs. current yields on comparable credit). You may sell the notes at the prevailing market price to lock in the spread, or short the stock and hedge the note exposure, especially if you expect the price to stay well below $30 for the remainder of the term.
- If you are bullish: Consider buying the notes (or the underlying stock) now and holding the debt position as a “coupon‑paying” vehicle while the equity climbs toward the $30 conversion level.
In short, the $30 conversion price sits well above today’s PBI price, limiting immediate conversion upside but leaving room for a significant upside play if the stock can rally toward that level over the next 5‑6 years. Your positioning should reflect how likely you think that rally is, given both the company’s fundamentals and the current technical backdrop.