Ionis, Li Auto on tap; Verint Systems, Century Aluminum eyed; Ceridian active

By Abigail W. Adams

Portland, Me., April 6 – The convertibles primary market returned to action on Tuesday with two small offerings set to price after the market close and two sizeable offerings on deck for Wednesday.

Ionis Pharmaceuticals Inc. plans to price $500 million in five-year convertible notes and Li Auto Inc. plans to price $750 million in seven-year convertible notes after the market close on Wednesday.

Century Aluminum Co. plans to price $75 million of seven-year convertible notes and Verint Systems Inc. plans to price $250 million of five-year convertible notes after the market close on Tuesday.

Both offerings looked cheap based on underwriters’ assumptions and were doing well during bookbuilding, sources said.

While new deal activity may slow as companies enter into their earnings season blackout, new issuance is expected to continue at a steady pace in the second quarter.

The convertibles market has plenty of money to put to work and companies are looking to the convertibles market as a way to monetize the volatility in their equity, a source said.

Changes to how companies are accounting for dilution is also a plus for new issuance, a source said.

Meanwhile, the convertible secondary space was quiet on Tuesday with equity benchmarks largely flat throughout the session.

There was $89 million on the tape about one hour into the session and $580 million on the tape heading into the market close.

Ceridian HCM Holding Inc.’s 0.25% convertible notes due 2026 returned to focus with the notes active after the greenshoe was recently exercised.

The calendar

After a slow start to the week, new deal activity picked up on Tuesday with two sizeable offerings set to price after Wednesday’s close.

Ionis Pharmaceuticals plans to price $500 million in five-year convertible notes after the market close on Wednesday with price talk for a fixed coupon of 0% and an initial conversion premium of 30% to 35%, according to a market source.

Goldman Sachs & Co. LLC and Stifel, Nicolaus & Co. Inc. are active bookrunners for the Rule 144A offering, which carries a greenshoe of $75 million.

Li Auto plans to price $750 million in seven-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 27.5% to 32.5%, according to a market source.

Goldman Sachs & Co. LLC, CLSA Ltd., China International Capital Corporation Ltd., UBS Securities LLC and Barclays are bookrunners for the Rule 144A and Regulation S offering, which carries a greenshoe of $112.5 million.

Verint Systems eyed

Verint Systems plans to price $250 million of five-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 30% to 35%, according to a market source.

The deal was marketed with assumptions of 300 basis points over Libor and a 40% vol., which looked about 3.41 points cheap at the midpoint of talk, sources said.

The deal was being done as a “happy meal,” a source said, with a portion of proceeds to be used to repurchase 1.6 million shares of common stock.

The deal was heard to be in demand during bookbuilding with the offering 1x to 2x oversubscribed, a source said.

Verint Systems is a serial issuer of convertible notes and is well-known to the buyside, another source said.

The company’s 1.5% convertible notes due 2021 currently trade with a 114-handle.

Century Aluminum eyed

Century Aluminum plans to price $75 million of seven-year convertible notes after the market close on Tuesday with price talk for a coupon of 2.25% to 2.75% and an initial conversion premium of 20% to 25%, according to a market source.

The deal was heard to be in the market with assumptions of 834 bps over Libor and a 40% vol., according to a market source.

Using those assumptions, the deal looked about 3.5 points cheap at the midpoint of talk.

However, the deal was too small for most accounts to consider, a source said.

Ceridian active

Ceridian’s 0.25% convertible notes due 2026 returned to focus on Tuesday although the notes were little changed in the high-volume activity.

The 0.25% convertible notes were changing hands at 97.875 versus an equity price of $87.63 in the late afternoon.

Ceridian stock traded to a high of $87.87 and a low of $85.33 before closing the day at $86.56, a decrease of 0.51%.

The greenshoe on the notes was recently exercised in full with the underwriter primarily responsible for the trading activity, sources said.

The 0.25% notes have struggled since hitting the aftermarket with the notes trading down to a 97-handle on their aftermarket debut March 3.

Mentioned in this article:

Century Aluminum Co. Nasdaq: CENX

Ionis Pharmaceuticals Inc. Nasdaq: IONS

Li Auto Inc. Nasdaq: LI

Verint Systems Inc. Nasdaq: VRNT

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