Etsy expands; Cinemark gains outright; BioMarin tanks outright, expands dollar-neutral

By Abigail W. Adams

Portland, Me., Aug. 20 – The convertibles primary market churned out what sources expect to be the last new deals of the week after the market close on Wednesday.

Etsy Inc. priced $650 million of seven-year convertible notes, and Sabre Corp. priced an upsized $300 million, or 3 million shares, of three-year $100-par series A mandatory convertible preferred stock.

The two deals bring the weekly total for new issuance to $4,075,000,000.

While the record-setting pace in the primary market has resumed, the highest volume week year to date remains the May 10 week when $8.37 billion priced over 15 deals.

The new paper was in focus in the secondary space with Etsy’s new convertible notes expanding on debut.

However, Sabre’s mandatory convertible preferred stock fell flat on a dollar-neutral basis.

Cinemark Holdings Inc.’s 4.5% convertible notes due 2025 remained active with the notes continuing to gain on an outright basis.

Outside of the new issues, BioMarin Pharmaceutical Inc.’s convertible notes continued to see some activity after they were crushed outright but skyrocketed dollar-neutral during Wednesday’s session.

Etsy in focus

Etsy priced $650 million of seven-year convertible notes after the market close on Wednesday at par with a coupon of 0.125% and an initial conversion premium of 52.5%, according to a market source.

Pricing came in line with revised terms for a coupon of 0.125% and at the rich end of revised terms for an initial conversion premium of 50% to 52.5%.

Initial price talk was for a coupon of 0.125% to 0.625% and an initial conversion premium of 47.5% to 52.5%.

The new paper saw a large dollar-neutral expansion despite its tight pricing.

The 0.125% convertible notes were up 1.5 to 2 points dollar-neutral in early trading, sources said.

They continued to gain as the session progressed.

The notes traded up to 102 on an outright basis in the late afternoon with stock off almost 1%.

They were seen expanded about 2.5 points dollar-neutral, a source said.

Etsy stock traded to a high of $131.51 and a low of $129.03 before closing the day at $130.09, a decrease of 0.79%.

Etsy became the latest issuer to tap the market to refinance its existing convertible notes.

Concurrently with the notes offering, the company exchanged $301.1 million of the principal amount of the 0% convertible notes due 2023 for $137.2 million in cash and 7.3 million shares in privately negotiated transactions.

Sabre upsizes

Sabre priced an upsized $300 million, or 3 million shares, of three-year $100-par series A mandatory convertible preferred stock after the market close on Wednesday at the midpoint of talk with a dividend of 6.5% and an initial conversion premium of 20%.

Price talk was for a dividend of 6.25% to 6.75% and an initial conversion premium of 17.5% to 22.5%, according to a market source.

The greenshoe was also upsized to $45 million.

The initial size of the offering was $250 million with a greenshoe of $37.5 million.

The 6.5% mandatory convertible preferred stock fell flat in the aftermarket despite modeling cheap, a source said.

They traded as low as $97 on an outright basis in the late afternoon with stock off more than 2%.

The notes were largely unchanged dollar-neutral, a source said.

Sabre stock traded to a high of $7.09 and a low of $6.80 before closing the day at $6.81, a decrease of 2.99%.

Concurrently with the convertible preferred stock, the company priced a secondary offering of $250 million, or 35,714,286, shares, at a public offering price of $7.00.

In addition to the convertible preferred stock and equity offering, Sabre tapped the high-yield market on Thursday and priced an upsized $850 million issue of five-year senior secured notes at par to yield 7 3/8%.

Cinemark gains outright

Cinemark’s new 4.5% convertible notes due 2025 continued to gain on an outright basis their second day in the secondary space as stock soared as the theater chain prepares to reopen.

The 4.5% convertible notes were up 4.75 points outright with stock up more than 10%.

They were changing hands at 107.375 late Thursday, a source said.

Cinemark stock traded to a low of $11.09 and a high of $12.49 before closing the day at $12.40, an increase of 11.26%.

Stock soared on Thursday as the theater chain prepares to open nearly one-third of its 500 locations on Friday, CNBC reported.

Stock was also lifted after a Benchmark analyst raised Cinemark stock to “buy” from “hold” and raised the price target to $18.00.

BioMarin crushed

BioMarin’s convertible notes continued to see some activity on Thursday after they were crushed on an outright basis but skyrocketed dollar-neutral on Wednesday.

BioMarin’s soon-to-mature 1.5% convertible notes due Oct. 15, 2020 remained wrapped around par on Thursday as stock continued to trade off.

The notes sank 25 points outright during Wednesday’s session with stock down as much as 37%.

However, the notes pushed out about 10 points dollar-neutral, a source said.

While the notes saw a large dollar-neutral expansion, there was not much life left to them with their maturity around the corner.

BioMarin’s 0.599% convertible notes were changing hands at 101.5 late Thursday afternoon.

The notes also dropped more than 20 points outright to a 101-handle during Wednesday’s session.

After closing Wednesday down more than 35%, BioMarin stock continued to trade off on Thursday.

Stock traded to a high of $76.73 and a low of $74.60 before closing the day at $74.85, a decrease of 2.43%.

Stock sold off on Wednesday after the Food and Drug Administration rejected the biotech company’s treatment for hemophilia.

Mentioned in this article:

BioMarin Pharmaceutical Inc. Nasdaq: BMRN

Cinemark Holdings Inc. NYSE: CNK

Etsy Inc. Nasdaq: ETSY

Sabre Corp. Nasdaq: SABR

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