Clarivate convertibles on tap; Etsy’s new offering in demand, existing issue contracts

By Abigail W. Adams

Portland, Me., June 8 – The convertibles primary market returned to action after more than a week-long hiatus with two large offerings on deck.

Clarivate plc plans to price $1.25 billion of three-year par-of-$100 series A mandatory convertible preferred stock after the market close on Wednesday with price talk for a dividend of 4.75% to 5.25% and a threshold appreciation premium of 17.5% to 22.5%, according to a market source.

Citigroup Global Markets Inc. is active bookrunner for the registered offering, which carries a greenshoe of $187.5 million.

BofA Securities Inc., RBC Capital Markets LLC, Barclays, HSBC Securities (USA) Inc. and J.P. Morgan Securities LLC are also bookrunners.

Etsy Inc. plans to price $1 billion of seven-year convertible notes after the market close on Tuesday.

The deal looked cheap based on underwriters’ assumptions and played to heavy demand during bookbuilding, sources said.

While Etsy prepped its latest offering, the company’s 0.125% convertible notes due 2027 were under pressure with the notes seeing a large dollar-neutral contraction in active trading.

With the primary market returning to action, there was an uptick of activity in the secondary space with $567 million in reported volume about one hour before the market close.

MicroStrategy Inc.’s 0% convertible bonds due 2027 remained active with the notes continuing to trade down on the heels of its junk bond offering and the continued decline in Bitcoin.

Etsy eyed

Etsy plans to price $1 billion of seven-year convertible notes after the market close on Tuesday with price talk for a coupon of 0.25% to 0.75% and an initial conversion premium of 42.5% to 47.5%.

The deal was heard to be in the market with assumptions of 250 basis points over Libor and a 40% vol., according to a market source.

Using those assumptions, the deal looked 1.125 points cheap at the midpoint of talk.

While price talk was suited to the current market, some sources were still skeptical of the offering given its high premium range and low coupon.

However, the deal met with solid demand and was heard to be as much as 3x oversubscribed, a source said.

The deal was coming as a “happy meal” with proceeds to be used to repurchase up to $150 million in common stock concurrently with the offering.

Remaining proceeds will be used to repurchase additional stock according to the company’s stock repurchase program.

Etsy is a serial issuer of convertibles notes.

As market players piled into the company’s latest offering, the 0.125% convertible notes due 2027 were coming in on an outright and dollar-neutral basis.

The 0.125% notes were down about 2 points outright as stock rose more than 1%.

They were changing hands at 115.875 versus a stock price of $169.57 in the late afternoon.

The notes contracted upwards of 2 points dollar-neutral, a source said.

Etsy’s stock traded to a high of $171.90 and a low of $166.36 before closing the day at $170.21, an increase of 1.12%.

Stock has been range bound between $160 and $170, near the midpoint of its 52-week high of $251.86 and 52-week low of $74.82, since its earnings report in early May.

Prior to its first-quarter earnings report, Etsy’s stock was above $200.

The Brooklyn-based e-commerce company for vintage and handmade goods recently announced its acquisition of the popular resale marketplace Depop for $1.6 billion, which propelled stock to a recent high of $176.85 on June 2, the date of the announcement.

MicroStrategy lower

MicroStrategy’s 0% convertible notes due 2027 continued to sink on an outright basis as stock continued to decline alongside the price of Bitcoin.

The 0% notes were down more than 1 point outright. They were changing hands at 65.25 versus a stock price of $456.86 in the late afternoon.

The notes were among the most actively traded in the secondary space with more than $25 million in reported volume.

MicroStrategy’s stock traded to a high of $461.89 and a low of $427.93 before closing the day at $459.38, a decrease of 2.22%.

MicroStrategy’s stock continued to decline alongside the price of Bitcoin, which traded as low as $31,277 during Tuesday’s session.

Bitcoin saw a minor rebound headed into the afternoon and was changing hands at $33,622, a decrease of 1.53%, at 5 p.m. ET.

MicroStrategy’s convertible notes have been active since the company announced on Monday it was pricing a $400 million offering of seven-year senior secured notes with proceeds to be used to purchase more Bitcoin.

The offering priced at par to yield 6.125%, tighter than talk for a yield of 6.25% to 6.5%.

Mentioned in this article:

Clarivate plc NYSE: CLV

Etsy Inc. Nasdaq: ETSY

MicroStrategy Inc. Nasdaq: MSTR

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