First Majestic convertibles on tap; Sea, Norwegian Cruise active; Pinduoduo pares losses

By Abigail W. Adams

Portland, Me., Nov. 29 – The convertibles primary market had two offerings on deck as equity markets attempted to rebound from Black Friday, which saw each major index drop by over 2%.

In a deal announced post-close, Array Technologies Inc. plans to price $325 million of seven-year convertible notes in a Rule 144A offering to fund the acquisition of Soluciones Tecnicas Integrales Norland SL. Further details were not available by press time.

First Majestic Silver Corp. plans to price $200 million of five-year convertible notes after the market close on Monday.

The offering looked cheap based on underwriters’ assumptions.

Meanwhile, the secondary space was active on Monday with equity markets mixed as the market digested the latest threat from the Omicron Covid-19 variant.

The Dow Jones industrial average closed the day up 236 points, or 0.68%, the S&P 500 index was up 1.32% and the Nasdaq Composite was up 1.88%. However, the Russell 2000 index closed the day down 0.25%.

There was $130 million in reported volume a little over one hour into Monday’s session and $478 million on the tape about one hour before the market close.

Sea Ltd.’s 0.25% convertible notes due 2026 were among the most actively traded issues early in the session as equity popped before coming in alongside the overall market.

NCL Corp. Ltd.’s recently priced 1.125% exchangeable notes due 2027 were also among the day’s top traders with the notes nominally improved after Friday’s sell-off.

Pinduoduo Inc.’s 0% convertible notes due 2025 were also on the mend as the Shanghai-based e-commerce company’s equity bounced off its lows following disappointing earnings last Friday.

First Majestic eyed

First Majestic plans to price $200 million of five-year convertible notes after the market close on Monday with price talk for a coupon of 0.125% to 0.625% and an initial conversion premium of 32.5% to 37.5%.

The deal was being marketed with assumptions of 450 basis points over Libor and a 45% vol.

Using those assumptions, the deal looked 3.25 points cheap at the midpoint of talk, a source said.

Another source saw the deal about 1.5 points cheap at the midpoint of talk.

The offering is the latest refinancing deal to come to market.

Proceeds will be used to repurchase the company’s 1.875% convertible notes due 2023 in privately negotiated transactions.

The company intends to call the remaining amount outstanding after the privately negotiated repurchases.

First Majestic’s 1.875% convertible notes were changing hands at 150.5 in early November, according to Trace data.

First Majestic priced a $156.5 million issue of the 1.875% notes at par in January 2018. The stock reference price for the 1.875% notes was $7.10.

First Majestic’s stock closed Monday at $12.27, an increase of 3.02%.

Sea active

Sea’s 0.25% convertible notes due 2026 were among the most actively traded issues on Monday with the company’s equity volatile.

The 0.25% convertible notes were trading at 98.5 versus an equity price of $305.82 early in the session, according to a market source.

The notes continued to trade around 98.5 as equity turned negative in intraday activity.

There was $17 million in reported volume.

Sea’s American Depositary Shares traded to a high of $307.86 shortly after the opening bell and a low of $289.60 before closing the day at $297.96, an increase of 0.38%.

Sea priced a $2.5 billion issue of the 0.25% notes at par in early September.

The notes were changing hands as high as 105 as recently as Nov. 15.

However, the notes dropped below par as a rising 10-year Treasury yield hit the tech sector.

Norwegian active

NCL’s recently priced 1.125% convertible notes due 2027 were nominally improved alongside Norwegian Cruise Line’s stock following Friday’s sell-off.

The 1.125% notes rose about 0.75 point outright. They were changing hands at 93.125 versus a stock price of $20.05 in the late afternoon.

There was about $17 million in reported volume.

Norwegian Cruise Line’s stock traded to a low of $19.57 and a high of $21.39 before closing the day at $20.22, an increase of 0.82%.

The convertible notes have underperformed since the company priced the $1 billion offering on Nov. 16.

However, the notes sank more than 8 points outright to trade as low as 91 last Friday as concern over the Omicron Covid-19 variant sparked a broad sell-off in equities with travel names particularly hard hit.

Pinduoduo pares losses

Pinduoduo’s 0% convertible notes due 2025 pared its losses from last Friday’s session as a broad sell-off in markets combined with disappointing earnings pushed the notes to their lowest level since pricing.

The 0% convertible notes rose almost 4 points outright with stock up more than 5%.

The notes were changing hands at 89.625 versus an equity price of $71.05 in the late afternoon.

There was $16 million in reported volume.

Pinduoduo’s American Depositary Shares traded to a low of $67.45 and a high of $72.38 before closing the day at $71.96, an increase of 5.11%.

The convertible notes fell to 85, an all-time low, on Friday as the company’s equity tumbled more than 15% following disappointing earnings.

Mentioned in this article:

Array Technologies Inc. Nasdaq: ARRY

First Majestic Silver Corp. NYSE: AG

NCL Corp. Ltd. NYSE: NCLH

Pinduoduo Inc. Nasdaq: PDD

Sea Ltd. NYSE: SE

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