Morning Commentary: Envestnet, Parsons convertible offerings eyed; secondary muted

By Abigail W. Adams

Portland, Me., Aug. 17 – The convertibles primary market launched the week with two overnight deals on deck.

Envestnet Inc. plans to price $450 million of five-year convertible notes and Parsons Corp. plans to price $300 million of five-year convertible notes after the market close on Monday.

The offerings had similar valuations with both looking cheap, sources said.

Meanwhile, the secondary space started the week with a crawl with just $34 million in reported volume about one hour into the session.

No name saw more than $5 million in reported volume, and there were few notable movements in the space, a source said.

Focus was on the new deals in the pipeline, the source said.

Envestnet on tap

Envestnet plans to price $450 million of five-year convertible notes after the market close on Monday with price talk for a coupon of 0.75% to 1.25% and an initial conversion premium of 30% to 35%.

The deal was marketed with assumptions of 400 basis points over Libor and a 35% vol, according to a market source.

Using those assumptions, the deal looked 3.37 points cheap at the midpoint of talk, a source said.

Parsons to price

Parsons plans to price $300 million of five-year convertible notes after the market close on Monday with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 30% to 35%, according to a market source.

The deal was heard to be in the market with assumptions of 300 bps over Libor and a 45% vol., a source said.

Using those assumptions, the deal looked 3.27 points cheap at the midpoint of talk.

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