Morning Commentary: Liberty exchangeables on tap; Pinduoduo megadeal prices, skyrockets

By Abigail W. Adams

Portland, Me., Nov. 18 – The convertibles primary market continued to roll out offerings with one deal set to price after the market close and another making its aftermarket debut.

Liberty Broadband Corp. plans to price $650 million of 30-year exchangeable notes tied to Charter Communications Inc.’s class A common stock after the market close on Wednesday with price talk for a coupon of 1.125% to 1.625% and an initial exchange premium of 37.5% to 42.5%, according to a market source.

Using assumptions of 250 basis points over Libor and a 27% vol., the deal looked 2.84 points cheap at the midpoint of talk, a source said.

Meanwhile, Pinduoduo Inc.’s megadeal hit the aftermarket and skyrocketed on debut.

The Shanghai-based e-commerce company priced $1.75 billion of five-year convertible notes prior to the market open on Wednesday at par with a coupon of 0% and an initial conversion premium of 52.5%.

Pricing came in line with talk for a fixed coupon of 0% and richer than initial talk for an initial conversion premium of 40% to 50%, according to a market source.

Concurrently with the convertible notes offering, the company priced a secondary offering of 28.7 million American Depositary Shares at $125.00 per share.

The new paper skyrocketed on debut.

It was up 3.33 points dollar-neutral based off of Tuesday’s closing price and even more if it was hedged against the secondary offering, a source said.

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