Boston Scientific, Under Armour, Five9 eyed; Becton Dickinson, Cryoport trade higher

By Abigail W. Adams

Portland, Me., May 21 – The convertibles primary market’s steady parade of new deals continued on Thursday with three offerings on deck and two new deals making their aftermarket debut.

Boston Scientific Corp. plans to price $750 million of $100-par three-year series A mandatory convertible preferred stock, Five9 Inc. plans to price $650 million of five-year convertible notes, and Under Armour Inc. plans to sell $400 million of four-year convertible notes after the market close on Thursday.

The deals continued to model cheap based on underwriters’ assumptions, sources said. However, sources favored some deals over others.

Thursday was the day of mandie in the convertibles universe as Becton, Dickinson and Co.’s $1.5 billion, or 30 million shares, of $50-par depositary shares representing a 1/20th interest in its $1,000-par three-year series B mandatory convertible preferred stock hit the secondary space.

The shares were performing well on their aftermarket debut.

New paper from Cryoport Inc. was also posting gains in active trading.

Boston Scientific ‘hot’

Boston Scientific plans to price $750 million of $100-par three-year series A mandatory convertible preferred stock after the market close on Thursday with price talk for a dividend of 5.25% to 5.75% and a threshold appreciation premium of 17.5% to 22.5%, according to a market source.

The deal was being marketed with assumptions of 175 basis points over Libor and a 30% to 33% vol., a source said.

Using those assumptions, the deal looked about 5 points cheap at the midpoint of talk.

With no dividend on its common stock, Boston Scientific’s offering was expected to “be hot,” a source said.

Mandatory offerings carry the highest yields in the convertibles universe, another source said.

While the maturities are short, which begs the question whether or not they should be called yields, “it sure is income,” the source said.

Concurrently with the convertible preferred stock, the company plans to price a $750 million secondary offering of common stock.

Five9 eyed

Five9 plans to sell $650 million of five-year convertible notes after the market close on Thursday with price talk for a coupon of 0.125% to 0.625% and an initial conversion premium of 30% to 35%.

The deal was heard to be marketed with assumptions of 450 bps over Libor and a 40% vol., according to a market source.

Using those assumptions, the deal looked 2.125 points cheap at the midpoint of talk, a source said.

In connection with the offering, the software company plans to purchase or exchange a portion of its 0.125% convertible notes due 2023.

The 0.125% notes due 2023 were trading around 254 on Wednesday, a source said.

Five9 priced a $258 million issue of the 0.125% notes due 2023 in May 2018.

Under Armour downgraded

Under Armour plans to price $400 million of four-year convertible notes after the market close on Thursday with price talk for a coupon of 1.25% to 1.75% and an initial conversion premium of 27.5% to 32.5%.

The deal was being marketed with assumptions of 650 bps over Libor and a 40% vol., according to a market source.

Using those assumptions, the deal looked about 3.125 points cheap at the midpoint of talk, a source said.

The credit spread from the athletic clothing apparel company seemed tight, a market source said.

The deals from the other retailers that tapped the market in the past few months all modeled north of 105, the source said.

Under Armour’s deal also comes amid a Moody’s Investors Service downgrade.

Moody’s downgraded the company’s corporate family rating to Ba3 from Ba2 and its unsecured notes to B1 from Ba2 on Thursday due to widespread store closures and weak consumer discretionary spending.

While the retailer’s liquidity looks good, the company’s recent credit facility amendment made the credit facility secured, subordinating the company’s unsecured and unguaranteed notes, Moody’s stated in a press release.

Becton Dickinson expands

Becton Dickinson priced $1.5 billion, or 30 million shares, of $50-par depositary shares representing a 1/20th interest in its $1,000-par three-year series B mandatory convertible preferred stock after the market close on Wednesday to yield 6% with a threshold appreciation premium of 20%.

Pricing came at the rich end of talk for a dividend of 6% to 6.5% and at the midpoint of talk for a threshold appreciation premium of 17.5% to 22.5%, according to a market source.

The depositary shares were putting in a solid performance in the secondary space even as stock sank.

They were seen at $50.25 bid, $50.55 offered versus as stock price of $239.50 early in the session.

The shares traded as high as $51.00 but were largely wrapped around $50.50 heading into the market close, a source said.

Becton Dickinson stock traded to a low of $234.51 and a high of $243.60 before closing the day at $238.94, a decrease of 1.67%.

Cryoport trades up

Cryoport priced $100 million of five-year convertible notes after the market close on Wednesday with a coupon of 3% and an initial conversion premium of 15%.

Pricing came at the wide end of talk for a coupon in the 2.75% area and in line with talk for an initial conversion premium of 15%, according to market sources.

While the offering was small, the new paper was active in the secondary space with more than $33 million in reported volume.

The notes traded as high as 104 during Thursday’s session, a market source said.

Cryoport’s stock traded to a low of $20.21 and a high of $21.50 before closing the day at $21.42, an increase of 3.03%.

Mentioned in this article:

Becton, Dickinson and Co. NYSE: BDX

Boston Scientific Corp. NYSE: BSX

Cryoport Inc. Nasdaq: CYRX

Five9 Inc. Nasdaq: FIVN

Under Armour Inc. NYSE: UA

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