Repay on tap; Nio, DocuSign convertible offerings eyed; Box notes expand on debut

By Abigail W. Adams

Portland, Me., Jan. 12 – New convertible notes were in focus on Tuesday with one deal on deck for Wednesday, two deals set to price after the market close on Tuesday and one more making its aftermarket debut.

Repay Holdings Corp. plans to price $350 million of five-year convertible notes after the market close on Wednesday with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 30% to 35%, according to a market source.

Credit Suisse Securities (USA) LLC, Citigroup Global Markets Inc., Barclays and Truist Securities Inc. are the bookrunners for the Rule 144A offering, which carries a greenshoe of $52.5 million.

Nio Inc. plans to price $1.3 billion of convertible notes in two tranches and DocuSign Inc. plans to sell $500 million of three-year convertible notes after the market close on Tuesday.

Both offerings were heard to be oversubscribed during bookbuilding with holders of old notes switching into the new.

Meanwhile, Box Inc.’s newly priced convertible notes dominated activity in the secondary space with the notes trading up on an outright and dollar-neutral debut.

Nio’s two tranches

Nio plans to sell $1.3 billion of convertible notes in two tranches after the market close on Tuesday.

The deal includes a $650 million tranche of five-year notes with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 45% to 50%.

Underwriters were marketing the tranche with assumptions of 450 basis points over Libor and a 45% vol., according to a market source.

Using those assumptions, the tranche looked 3.27 points cheap at the midpoint of talk.

The deal also includes a $650 million tranche of six-year notes with price talk for a coupon of 0.5% to 1% and an initial conversion premium of 45% to 50%.

Assumptions for the tranche were 475 bps over Libor and a 45% vol., which looked about 3 points cheap at the midpoint of talk.

Both tranches were heard to be heavily oversubscribed with holders of Nio’s old notes given preference for allocations.

Concurrently with the offering, the company will enter into privately negotiated transactions with holders of its 4.5% convertible notes due 2024 to exchange a portion of the notes for American Depositary Shares.

The 4.5% notes were Nio’s debut appearance in the convertibles market – the Shanghai-based electric car manufacturer priced a $750 million issue of the notes in January 2019.

The notes saw wild price movements over the past two years.

At one point, the notes were deeply distressed. They traded as low as 24 in mid-2019 with the company on the verge of bankruptcy.

However, Nio staged a remarkable rebound and the 4.5% notes closed Monday at 666, according to Trace data.

While down on Tuesday, Nio’s stock broke out to a new 52-week high on Monday and Tuesday following an investor event where it unveiled a new electric sedan.

DocuSign on tap

DocuSign plans to price $500 million three-year convertible notes after the market close on Tuesday with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 57.5% to 62.5%.

The deal was being marketed with assumptions of 225 bps over Libor and a 42% vol., according to a market source.

Using those assumptions, the deal looked 1.73 points cheap at the midpoint of talk, a source said.

The three-year maturity on the notes was unusual, a source said.

Proceeds will be used, in part, to fund the repurchase of the company’s 0.5% convertible notes due 2023 in privately negotiated transactions.

The deal was also heard to be heavily oversubscribed with holders of DocuSign’s outstanding notes given first priority for the new offering, a source said.

DocuSign priced a $575 million issue of the 0.5% notes in September 2018. The notes currently trade at triple par.

Box in focus

Box sold an upsized $315 million of five-year convertible notes after the market close on Monday at par with a coupon of 0% and an initial conversion premium of 45%.

Pricing came in line with tightened talk for a fixed coupon of 0% and at the rich end of talk for an initial conversion premium of 42.5% to 45%, according to a market source.

Initial price talk was for a coupon of 0% to 0.5% and an initial conversion premium of 35% to 40%.

The new paper was trading up on debut.

The 0% notes traded as high as 103.25 early in the session. However, they came in on an outright basis alongside stock and were trading in a range of 101.25 to 101.5 throughout the afternoon.

The notes expanded upwards of 2 points dollar-neutral, a source said.

Box’s stock traded to a high of $18.00 and a low of $17.40 before closing the day at $17.50, a decrease of 1.63%.

Mentioned in this article:

Box Inc. NYSE: BOX

DocuSign Inc. Nasdaq: DOCU

Nio Inc. NYSE: NIO

Repay Holdings Corp. Nasdaq: RPAY

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