Morning Commentary: John Bean convertibles on tap; Shift Technologies upsizes notes

By Abigail W. Adams

Portland, Me., May 25 – The convertibles primary market remained active on Tuesday with one deal launching before the market open.

John Bean Technologies Corp. plans to price $350 million of five-year convertible notes after the market close on Tuesday.

The deal looked cheap based on underwriters’ assumptions. While the company was eyeing a 0% coupon in its price talk, the talk seemed reasonable given the company’s fundamentals, a source said.

Meanwhile, Shift Technologies Inc. priced an upsized $125 million of five-year convertible notes after the market close on Monday.

John Bean eyed

John Bean Technologies plans to price $350 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.

Underwriters were marketing the deal with assumptions of 300 basis points over Libor and a 36% vol.

Using those assumptions, the deal looked 1.86 points cheap at the midpoint of talk, a source said.

The pricing looked reasonable, a source said.

While the Chicago-based food processing and airport equipment company was eyeing a 0% coupon, it had solid fundamentals and a $4.5 billion market cap.

Unlike some of the other growth companies that priced with 0% coupons, “these guys make money,” a source said.

The company’s sector was also unique for the convertibles market.

Shift upsizes

Shift Technologies priced an upsized $125 million of five-year convertible notes after the market close on Monday at the midpoint of talk with a coupon of 4.75% and an initial conversion premium of 27.5%.

Price talk was for a coupon of 4.5% to 5% and an initial conversion premium of 25% to 30%, according to a market source.

The greenshoe was also upsized to $25 million.

The initial size of the offering was $75 million with a greenshoe of $11.25 million.

The new paper was not seen on Trace early in the session.

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