assume $10 convert price (25% premium) and a coupon
near 6%. The stock will remain under pressure as the hedggies set up their shorts and then buy the convert. (they are therefore hedged on the stock movement and earn the coupon and the short rebate.) I see upside about a month from now, then the underwritters can upgrade TSYS (30 days after convert offering).
Of all the posts out there, yours makes the most sense. I see no one has reposnded to your posts, because though many here know what a convertible is and what it does, no one here understands what it does to short term trading.
I just wantd to let you know, at least one person, the accumulator know what you are talking about.
To add on to your comment, the reaction is overdone, since we don't even know what the converting price is.
This kind of market reaction always happen when a convertible bonds are issued. As you siad, hedge funds (traders) set up short positions.
In a very short term, once convertible price is known, eventually, stock price will generally rise above the converting price.
Look at the posts out there. No one poster (other than you) really understands this dynamic.