Progress Software eyed; Ionis sees strong start, weakens as session progresses; Li Auto gains

By Abigail W. Adams

Portland, Me., April 8 – New paper remained in focus on Thursday with one $300 million offering set to price after the market close and $1.3 billion in two deals making their aftermarket debuts.

Progress Software Corp. plans to price $300 million of five-year convertible notes after the market close on Thursday.

The deal looked cheap based on underwriters’ assumptions and had optically attractive terms, sources said.

As market players eyed the new deals in the works, new paper from Li Auto Inc. and Ionis Pharmaceuticals Inc. made their aftermarket debuts.

While Ionis’ new notes were strong out of the gate, they lost steam as the session progressed.

However, Li Auto’s new convertible notes were making large gains on an outright and dollar-neutral basis.

Progress Software eyed

Progress Software plans to price $300 million of five-year convertible notes after the market close on Thursday with price talk for a coupon of 0.75% to 1.25% and an initial conversion premium of 25% to 30%, according to a market source.

The deal was heard to be in the market with assumptions of 300 bps over Libor and a 33% vol., a market source said.

Using those assumptions, the deal looked 3.08 points cheap at the midpoint of talk.

The deal not only modeled cheap, but had optically attractive terms, a source said, with the coupon range a far cry from the 0% convertible notes that have populated the convertibles universe in recent months.

The deal was met with solid demand during bookbuilding and was expected to price at the mids, a source said.

Li Auto gains

Li Auto priced $750 million in seven-year convertible notes after the market close on Wednesday at par with a coupon of 0.25% and an initial conversion premium of 27.5%.

Pricing came at the midpoint of talk for a coupon of 0% to 0.5% and at the cheap end of talk for an initial conversion premium of 27.5% to 32.5%, according to a market source.

The new notes were putting in a strong performance on an outright and dollar-neutral basis.

They were trading around 103 on an outright basis in the late afternoon, a source said.

The notes expanded upwards of 2 points dollar-neutral.

The Beijing-based electric vehicle manufacturer’s American Depositary Shares traded to a high of $23.50 and a low of $22.34 before closing the day at $23.23, an increase of 4.5%.

Ionis loses steam

Ionis Pharmaceuticals priced an upsized $550 million of five-year convertible notes after the market close on Wednesday at par with a coupon of 0% and an initial conversion premium of 32.5%.

Pricing came in line with price talk for a fixed coupon of 0% and at the midpoint of talk for an initial conversion premium of 30% to 35%, according to a market source.

The new paper was initially strong out of the gate.

The 0% notes traded to a high of 102 with most prints between 101.25 and 102 early in the session, a source said.

They were initially up 1.5 points dollar-neutral. However, they grew weaker as the session progressed.

The notes were trading on a par-handle in the late afternoon and gave up much of their dollar-neutral expansion.

They were marked at 100.25 bid, 100.5 offered and were expanded about 0.5 point dollar-neutral, a source said.

“The stock didn’t help,” a source said.

Ionis stock traded to a high of $43.71 and a low of $42.50 before closing the day at $42.69, a decrease of 2.2%.

Concurrent to the new offering, Ionis repurchased $247.9 million in principal of its 1% convertible notes due 2021 for $257 million in cash in privately negotiated transactions.

The 1% notes were repurchased for 103.5, which was about a 1 point premium to their previous trading level.

While the premium seemed steep, the takeout “kiss” helped drive demand for the new offering, a source said.

Mentioned in this article:

Ionis Pharmaceuticals Inc. Nasdaq: IONS

Li Auto Inc. Nasdaq: LI

Progress Software Corp. Nasdaq: PRGS

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