Morning Commentary: BlackLine, Clovis Oncology convertibles on tap; four deals price

By Abigail W. Adams

Portland, Me., Aug. 8 – The convertibles primary market continued to roll out new deals at a dizzying pace with four issuers pricing a combined $1.3 billion over six tranches and two issuers set to price an additional $660 million after the market close.

Alteryx Inc. priced $700 million in two tranches, Ironwood Pharmaceuticals, Inc. priced an upsized $350 million in two tranches, CorEnergy Infrastructure Trust, Inc. priced $100 million of six-year convertible notes, and Mesa Laboratories Inc. sold $150 million of six-year convertible notes.

The new paper was performing well in the secondary.

While the new paper flooded the secondary space, two more deals were on deck.

BlackLine Inc. plans to price $435 million of five-year convertible notes and Clovis Oncology, Inc. plans to price $225 million of five-year convertible notes after the market close on Thursday.

Both deals looked cheap, sources said.

Alteryx at the mids

Alteryx priced a $350 million tranche of five-year convertible notes and a $350 million tranche of seven-year convertible notes after the market close on Wednesday.

The five-year convertible notes priced at par with a coupon of 0.5% and an initial conversion premium of 50%.

Price talk was for a coupon of 0.25% to 0.75% and an initial conversion premium of 45% to 50%, according to a market source.

The seven-year convertible notes priced at par with a coupon of 1% and an initial conversion premium of 50%.

Price talk was for a coupon of 0.75% to 1.25% and an initial conversion premium of 45% to 50%.

The new paper was performing well in the secondary with both tranches trading up, a market source said.

Ironwood upsizes

Ironwood priced an upsized $175 million tranche of five-year convertible notes and an upsized $175 million tranche of seven-year convertible notes at the midpoint of talk prior to the market open on Thursday, according to a company news release.

The five-year tranche priced at par with a coupon of 0.75% and an initial conversion premium of 37.5%.

Price talk had been for a coupon of 0.625% to 1.125% and an initial conversion premium of 35% to 40%.

The seven-year tranche priced at par with a coupon of 1.5% and an initial conversion premium of 37.5%.

Price talk had been for a coupon of 1.25% to 1.75% and an initial conversion premium of 35% to 40%.

While both tranches were trading up in the secondary space, the shorter duration notes were faring better than the longer duration tranche.

The 0.75% notes were changing hands between 100.5 and 101 with stock unchanged to down slightly early in the session. They expanded about 1 point dollar-neutral, a market source said.

The 1.5% convertible notes were trading between 100.25 and 100.75 on an outright basis.

Ironwood stock was $9.67, a decrease of 0.72%, shortly before 11 a.m. ET.

Mesa comes rich

Mesa Laboratories priced $150 million of six-year convertible notes after the market close on Wednesday at par with a coupon of 1.375% and an initial conversion premium of 35%.

Pricing came at the rich end of talk for a coupon of 1.375% to 1.875% and an initial conversion premium of 30% to 35%, according to a market source.

The 1.375% notes skyrocketed in the secondary.

They were changing hands around 104 on an outright basis and were expanded 2.5 points to 3 points dollar-neutral, a market source said.

Mesa stock was $216.81, a decrease of 2.34%, shortly before 11 a.m. ET.

CorEnergy at the mids

CorEnergy Infrastructure priced $100 million of six-year convertible notes after the market close on Wednesday at the midpoint of talk with a coupon of 5.875% and an initial conversion premium of 13%.

Price talk had been for a coupon of 5.5% to 6% and an initial conversion premium of 12.5% to 17.5%, according to a market source.

BlackLine looks cheap

BlackLine plans to price $435 million of five-year convertible notes after the market close on Thursday with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 32.5% to 37.5%.

Underwriters were marketing the deal with assumptions of 300 bps over Libor and a 40% vol.

Using those assumptions, the deal modeled about 2.25 points cheap at the midpoint of talk, a source said.

More Clovis

Clovis plans to price $225 million of five-year convertible notes after the market close on Thursday with price talk for a coupon of 4% to 4.5% and an initial conversion premium of 25% to 30%.

Proceeds will be used, in part, to repurchase a portion of Clovis’ 2.5% convertible notes due 2021 in privately negotiated transactions.

Sources pegged assumptions at 1,200 bps over Libor and a 45% vol., which modeled 3 to 4 points cheap at the midpoint of talk.

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