Morning Commentary: Pinduoduo convertible offering eyed; Guardant expands on debut

By Abigail W. Adams

Portland, Me., Nov. 17 – New paper was in focus on Tuesday in the convertibles market with one large offering set to price after the market close and another making its aftermarket debut.

Pinduoduo Inc. plans to price $1.75 billion of five-year convertible notes after the market close.

The large offering from the Shanghai-based e-commerce platform looked cheap based on underwriters’ assumptions, a source said.

The offering comes just after the company’s American Depositary Shares broke out to a new 52-week high.

Meanwhile, Guardant Health Inc.’s newly priced 0% convertible notes due 2027 made their aftermarket debut.

The notes were expanding in active trading with the demand seen during bookbuilding following them into the secondary space.

Pinduoduo eyed

Pinduoduo plans to price $1.75 billion of five-year convertible notes after the market close on Tuesday with price talk for a fixed coupon of 0% and an initial conversion premium of 40% to 50%.

Underwriters were marketing the deal with assumptions of 350 basis points over Libor and a 40% vol., which modeled about 3 points cheap at the midpoint of talk, sources said.

The deal is pricing concurrently with a secondary offering of up to 22 million ADS.

The offerings come just after Pinduoduo’s ADSs set a 52-week high of $155.61 in intraday trading last Friday.

While not active on Monday, the company’s outstanding 0% convertible notes due 2024 saw a flurry of activity late last week as the underlying equity broke out.

The company’s outstanding 0% convertible notes due 2024 now trade at triple par.

Guardant Health expands

Guardant Health priced $1 billion of seven-year convertible notes after the market close on Monday at par with a coupon of 0% and an initial conversion premium of 34%.

Pricing came at the rich end of revised talk for a yield of 0% to 0.25% and richer than revised talk for an initial conversion premium of 30% to 32.5%, according to a market source.

Revised talk tightened from the initial price talk of a coupon of 0% to 0.5% and an initial conversion premium of 27.5% to 32.5%.

The new paper was in focus in the secondary space with the notes trading in a tight range of 100.75 and 101.5 as stock waivered between gains and losses.

The notes were expanded 1.5 points dollar-neutral, a source said.

Guardant Health’s stock traded to a low of $102.51 but was changing hands at $105.92, an increase of 1.51%, shortly before 11 a.m. ET.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.