Morning Commentary: Tyler Technologies, AES, Cutera eyed; new deals hit aftermarket

By Abigail W. Adams

Portland, Me., Mach 4 – The new deal frenzy in the convertible bond market continued on Thursday with the primary market slated to price $2.725 billion in three deals after the market close while $2.25 billion in two deals made their aftermarket debut.

Tyler Technologies Inc. is on deck with a $1.6 billion offering of convertible notes in five- and seven-year tranches, AES Corp. plans to price $1 billion par-of-$100 three-year equity units and Cutera Inc. plans to sell $125 million in five-year convertible notes after the market close.

While market players eyed the new deals in the works, Airbnb Inc.’s mammoth $2 billion deal and the RealReal Inc.’s $250 million deal made their aftermarket debut.

While new paper from RealReal dropped below par, Airbnb was performing well as equities wavered between gains and losses early in the session.

Tyler’s tranches

Tyler Technologies plans to price $1.6 billion of convertible notes in five- and seven-year tranches after the market close on Thursday, according to a market source.

The deal consists of a $1 billion tranche of five-year notes with talk for a fixed coupon of 0% and an initial conversion premium of 32.5% to 37.5%.

The deal also consists of a $600 million tranche of seven-year notes with price talk for a coupon of 0.25% to 0.75% and an initial conversion premium of 32.5% to 37.5%.

The deal did not look very attractive, a source said.

AES eyed

AES plans to price $1 billion par-of-$100 three-year equity units after the market close on Thursday with price talk for a yield of 6.375% to 6.875% and a threshold appreciation premium of 22.5% to 27.5%, according to a market source.

The deal was heard to be in the market with assumptions of 125 bps over Libor and a 35% vol., with a 36.5% to 33.5% skew, according to a market source.

Using those assumptions, the deal looked 2.23 points cheap.

Cutera eyed

Cutera plans to price $125 million of five-year convertible notes after the market close on Thursday with price talk for a coupon of 1.75% to 2.25% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

The deal was heard to be in the market with assumptions of 650 bps over Libor and a 40% vol.

Airbnb expands

Airbnb priced $2 billion of five-year convertible notes after the market close on Wednesday at par with a coupon of 0% and an initial conversion premium of 60%.

Pricing came in line with talk for a fixed coupon of 0% and at the cheap end of talk for an initial conversion premium of 60% to 65%, according to a market source.

The new paper was performing well on debut. The notes were trading in a tight range between 100.25 and 100.5 on an outright basis, a source said.

They expanded about 1 point on a dollar-neutral, or hedged, basis.

Airbnb’s stock was changing hands at $177.94, a decrease of 1.37%, shortly before 11 a.m. ET.

RealReal below par

The RealReal priced $250 million of seven-year convertible notes after the market close on Wednesday at par with a coupon of 1% and an initial conversion premium of 32.5%.

Pricing came at the cheap end of talk for a coupon of 0.5% to 1% and an initial conversion premium of 32.5% to 37.5%, according to a market source.

The new paper dropped below par early in Thursday’s session.

It was changing hands around 99.

RealReal’s stock was trading at $22.46, a decrease of 6.31%, 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.