Morning Commentary: Array convertible offering eyed; First Majestic expands on debut

By Abigail W. Adams

Portland, Me., Nov. 30 – New convertible paper was in focus on Tuesday with one deal slated to price after the market close and another making its aftermarket debut.

Array Technologies Inc. plans to price $325 million of seven-year convertible notes after the market close on Tuesday. The deal looked cheap based on underwriters’ assumptions and is from a hot sector.

As market players eyed the new deal in the pipeline, new paper form First Majestic Silver Corp. made its aftermarket debut.

The new paper was putting in a strong performance in the aftermarket and trading up on an outright and dollar-neutral basis despite a sell-off in equities.

The Dow Jones industrial average was down 519 points, or 1.48%, the S&P 500 index was down 1.64% and the Nasdaq Composite was down 1.7% shortly before 11 a.m. ET.

Array Technologies eyed

Array Technologies plans to price $325 million of seven-year convertible notes after the market close on Tuesday with price talk for a coupon of 0.75% to 1.25% and an initial conversion premium of 30% to 35%.

The deal was heard to be in the market with assumptions of 450 basis points over Libor and a 42% vol., according to a market source.

Using those assumptions, the deal looked 1.63 points cheap at the midpoint of talk.

First Majestic expands

First Majestic priced $200 million of five-year convertible notes after the market close on Monday at par at the midpoint of talk with a coupon of 0.375% and an initial conversion premium of 35%.

Price talk was for a coupon of 0.125% to 0.625% and an initial conversion premium of 32.5% to 37.5%, according to a market source.

Approximately $125.2 million of net proceeds will be used to repurchase the company’s 1.875% convertible notes due 2023 in privately negotiated transactions.

The remaining 1.875% notes will be called.

The new 0.375% notes were performing well on their aftermarket debut.

The notes were changing hands between 102 and 102.5 about one hour into the session.

They expanded about 1.5 points dollar-neutral, a source said.

First Majestic’s stock traded as high as $12.66 before selling off alongside the broader market. Stock was trading at $11.92, a decrease of 2.85%, shortly before 11 a.m. ET.

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