Spirit Airlines on tap; Snap convertible offering eyed; Proofpoint, DISH notes active

By Abigail W. Adams

Portland, Me., April 27 – The convertibles primary market returned to action after a more than week long hiatus with two offerings on deck.

Spirit Airlines Inc. plans to price $440 million of five-year convertible notes after the market close on Wednesday with price talk for a coupon of 1% to 1.5% and an initial conversion premium of 37.5% to 42.5%, according to a market source.

Barclays, Morgan Stanley & Co. LLC, Citigroup Global Markets Inc. and Deutsche Bank Securities Inc. are bookrunners for the registered offering, which carries a greenshoe of $60 million.

Snap Inc. plans to price $1 billion of six-year convertible notes after the market close on Tuesday. The deal from the serial issuer of convertible notes was in demand during bookbuilding with price talk tightening.

Holders of Snap’s outstanding convertible notes were also set to make out in the exchange agreement connected to the offering.

Meanwhile, it was a quiet day in the convertibles secondary space with $650 million in reported volume at the market close.

Proofpoint Inc.’s 0.25% convertible notes due 2024 remained active with outright holders selling the notes ahead of their takeout.

DISH Network Corp.’s convertible notes also remained active although little changed dollar-neutral as the company’s stock saw its first pullback in almost a week.

Snap draws demand

Snap plans to price $1 billion of six-year convertible notes after the market close on Tuesday. The deal was in demand during bookbuilding with talk tightening to a coupon of 0% to 0.25% and a fixed conversion premium of 47.5%, according to a market source.

Initial talk was for a coupon of 0% to 0.5% and an initial conversion premium of 45% to 50%, according to a market source.

The deal was heard to be in the market with assumptions of 225 basis points over Libor and a 42% vol., according to a market source.

Using those assumptions, the deal looked about 2 points cheap at the midpoint of initial talk.

The camera and social media company is a repeat issuer of convertible notes and plans to enter into privately negotiated exchange agreements with holders of its deep-in-the-money 0.75% convertible notes due 2026 and 0.25% convertible notes due 2025.

The notes were most likely being bought back at a good price to entice participation in the new offering, a source said.

While the company was being selective about which holders would be able to sell their notes back in the exchange, the 0.75% and 0.25% notes were being bought back with a premium of 1.5 points, a source said.

The deep-in-the-money convertible notes were previously trading at parity.

Proofpoint active

Proofpoint’s 0.25% convertible notes due 2024 continued to dominate the tape with outright holders selling the notes ahead of their takeout, a source said.

The 0.25% notes were changing hands at 124.625 in the late afternoon.

There was more than $28 million in reported volume, making them one of the top traders in the secondary space.

Proofpoint’s 0.25% convertible notes have been in focus since news broke on Monday that Thoma Bravo would take the company private in a $12.3 billion acquisition.

While hedge players stood to gain 1.5 points dollar-neutral on the takeout, outright holders made out as the company’s notes skyrocketed on the news.

Prior to the announced acquisition, the notes were trading at 107.

DISH in focus

DISH’s 0% convertible notes due 2025 remained major volume movers in the secondary space.

The notes were down slightly on an outright basis as stock pulled back from recent highs.

The 0% convertible notes were changing hands at 118.25 versus a stock price of $42.54 in the late afternoon.

While down outright, they were largely unchanged dollar-neutral, a source said.

There was more than $23 million of the bonds on the tape during Tuesday’s session.

DISH’s stock traded to a high of $43.45 and a low of $42.26 before closing the day at $42.46, a decrease of 1.44%.

DISH’s stock and convertible notes skyrocketed over the past week with stock on a tear after the company announced it was partnering with Amazon Web Services to build out its 5G network.

Mentioned in this article:

DISH Network Corp. Nasdaq: DISH

Proofpoint Inc. Nasdaq: PFPT

Snap Inc. NYSE: SNAP

Spirit Airlines Inc. NYSE: SAVE

© 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.