Realogy convertibles a ‘blowout’; Beyond Meat in focus; Ford, John Bean gains continue

By Abigail W. Adams

Portland, Me., May 27 – The convertibles primary market surprised sources who were expecting a quiet end to the week and launched one deal prior to the market open.

Realogy Holdings Corp. plans to price $300 million of five-year exchangeable notes after the market close on Thursday.

The deal was shaping up to be a “blowout,” a source said.

Meanwhile, it was a relatively active day in the secondary space with $550 million in reported volume about one hour before the market close.

Beyond Meat Inc.’s 0% convertible notes due 2027 were in focus as stock caught fire with the plant-based food company coming into the sights of the Reddit army.

John Bean Technologies Corp.’s 0.25% convertible notes due 2026 continued their upward momentum their second day in the secondary space.

Ford Motor Co.’s 0% convertible notes due 2026 hit their highest outright level since pricing as stock again broke out to set a new 52-week high.

Realogy in primary

Realogy Holdings plans to price $300 million of five-year exchangeable notes after the market close on Thursday with price talk for a coupon of 0.25% to 0.75% and an initial exchange premium of 35% to 40%, according to a market source.

The deal was in the market with assumptions of 350 basis points over Libor and a 40% vol.

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

Another source saw the offering about 2 points cheap.

The deal played to massive demand during bookbuilding. “It’s looking like a blowout,” a source said.

The notes are expected to price on the rich end of talk.

The integrated residential real estate services provider, which includes brokerage, relocation, title and settlement businesses and a mortgage joint venture is a well-known name in the high-yield market.

The company is highly leveraged but is an ideal candidate for a convertible bond, a source.

While the company’s unsecured debt is on the lower credit tier, the fundamentals of the company have improved dramatically in recent months.

Realogy trounced earnings expectations in late April with the real estate sector one of the benefactors of the Covid-19 economic shutdown.

The 350 bps credit spread might even be conservative, a source said.

Given the company’s current fundamentals, underwriters could have been more aggressive, the source said.

Beyond Meat eyed

Beyond Meat’s 0% convertible notes due 2027 were in focus on Thursday as stock caught fire and shot up more than 12%.

The 0% notes, which closed out last week on an 86-handle, traded up to 99 early in Thursday’s session.

The notes were changing hands at 98.875 versus a stock price of $141.23 in the late afternoon.

They expanded 0.25 point to 0.375 point dollar-neutral, a source said.

There was more than $40 million in reported volume.

The notes did not see a greater move dollar-neutral because of the delta people were playing the notes with.

“It’s surprising they didn’t push out more, but it’s one of these not heavy enough on the [stock move] down, not light enough on the way up,” a source said.

Beyond Meat’s stock traded to a low of $133.54 and a high of $146.80 before closing the day at $142.61, an increase of 12.62%.

Beyond Meat’s stock dipped below $100 as recently as last week. However, it has been on an upward trajectory over the past week.

While stock was posting gains on Wednesday after the company announced an expansion of its partnership with KFC, the surge in stock on Thursday was attributed to Reddit and CNBC’s Jim Cramer.

On his Mad Money show Wednesday night, Cramer suggested the Reddit army set their sights on Beyond Meat to drive a short squeeze.

John Bean gains continue

John Bean Technologies’ 0.25% convertible notes due 2026 continued to gain on an outright basis their second day in the secondary space.

The 0.25% notes were up another 1 point with stock up more than 2%.

They were marked at 107.25 versus a stock price of $143.38 in the late afternoon.

There was more than $11 million in reported volume.

John Bean’s stock traded to a high of $145.93 and a low of $141.12 before closing the day at $145.71, an increase of 2.69%.

Ford’s new heights

Ford’s 0% convertible notes due 2026 hit a new outright high as stock set a fresh 52-week record after the car manufacturer unveiled its electric vehicle ambitions.

The 0% convertible notes jumped more than 3 points outright with stock up more than 7%.

They were changing hands at 110.375 versus a stock price of $14.66 in the late afternoon, according to a market source.

The notes were active with more than $27 million in reported volume.

Ford’s stock traded to a low of $14.12 and a new 52-week high of $15.05 before closing the day at $14.88, an increase of 7.05%.

Ford’s 0% convertible notes and stock have surged over the past week as the company unveiled its electric F-150 pickup truck, which was met with a flurry of early orders, and presented two new electric vehicle platforms during its investors day on Wednesday.

Mentioned in this article:

Beyond Meat Inc. Nasdaq: BYND

Ford Motor Co. NYSE: F

John Bean Technologies Corp. NYSE: JBT

Realogy Holdings Corp. NYSE: RLGY

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