Clarivate, WisdomTree convertibles on tap; Etsy expands on debut, outstanding issue contracts

By Abigail W. Adams

Portland, Me., June 9 – The convertibles primary and secondary markets were active on Wednesday with two deals totaling $1.4 billion set to price after the market close and another $1 billion deal making its aftermarket debut.

Clarivate plc plans to price $1.25 billion of par-of-$100 three-year series A mandatory convertible preferred stock after the market close on Wednesday.

While stock was taking a hit on the heels of the new offering, the deal was heard to be doing well during bookbuilding.

WisdomTree Investments Inc. is also on deck with a $150 million offering of five-year convertible notes. The offering was wall-crossed, sources said.

Meanwhile, Etsy Inc.’s latest offering made its aftermarket debut. The new paper was in focus in the secondary space and saw a large dollar-neutral expansion.

However, Etsy’s 0.125% convertible notes due 2027 continued to contract with holders selling the old for the new.

Clarivate eyed

Clarivate 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%.

Underwriters were marketing the deal with assumptions of 450 basis points over Libor and a 40% vol. with a 2% skew, a source said.

Using those assumptions, the deal looked 1.52 points cheap.

The deal looked reasonably priced for a mandatory, a source said.

While the deal was not “hot,” it seemed to be doing well during bookbuilding, sources said.

The mandatory convertible preferred offering was part of a multi-billion-dollar capital raise to fund Clarivate’s acquisition of publishing company ProQuest.

Concurrently with the mandatory convertible preferred stock, Clarivate, a data and analytics company, is pricing a secondary offering of $750 million in common stock. In addition, certain shareholders intend to sell $250 million shares.

The concurrent offerings were large for a company the size of Clarivate and stock was under pressure during Wednesday’s session, sources said.

Clarivate’s stock closed Wednesday at $26.39, a decrease of 19.59%.

With stock taking a hit during Wednesday’s session, the mandatory convertible preferreds looked even more attractive, the source said.

WisdomTree wall-crossed

WisdomTree Investments plans to price $150 million of five-year convertible notes after the market close on Wednesday with price talk for a coupon of 3% to 3.5% and an initial conversion premium of 57.5% to 62.5%, according to a market source.

The small offering was wall-crossed and was already mostly spoken for, sources said.

Etsy in focus

Etsy priced $1 billion of seven-year convertible notes after the market close on Tuesday at par with a coupon of 0.25% and an initial conversion premium of 45%.

Pricing came at the rich end of talk for a coupon of 0.25% to 0.75% and at the midpoint of talk for an initial conversion premium of 42.5% to 47.5%, according to a market source.

The new paper was in focus in the secondary space and performing well on an outright and dollar-neutral basis.

The 0.25% convertible notes traded as high as 103 as stock surged shortly after the opening bell.

The notes settled to trade around 102.5 about one hour into the session. They expanded between 1 and 1.5 points dollar-neutral, a source said.

While the notes came in on an outright basis as stock sold off heading into the market close, the notes stood poised to close the day with a 2 point dollar-neutral expansion, a source said.

While Etsy’s latest offering was the focus of the secondary space on Wednesday, the Brooklyn-based e-commerce company’s 0.125% convertible notes due 2027 remained active with the notes continuing to contract.

The 0.125% notes traded down to 115.375 heading into the market close.

They contracted another 1 point dollar-neutral after a 2 point contraction the previous session, sources said.

While the 0.125% convertible notes had a lower coupon than Etsy’s latest offering, there was not enough of a differential to make much of a difference.

However, the 0.125% notes were trading at levels that were 6 to 7 points rich compared to the latest offering, a source said.

Holders were switching out of the old notes in favor of Etsy’s latest offering, a source said.

Etsy’s stock traded to a high of $174.69 and a low of $167.01 before closing the day at $167.30, a decrease of 1.71%.

Mentioned in this article:

Clarivate plc NYSE: CLVT

Etsy Inc. Nasdaq: ETSY

WisdomTree Investments Inc. Nasdaq: WETF

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