Morning Commentary: Shift4 convertible notes upsized, expand on debut in early trading

By Abigail W. Adams

Portland, Me., July 22 – The first new convertible bonds to be priced in more than three weeks hit the secondary space on Thursday.

Shift4 Payments Inc. priced an upsized $550 million of six-year convertible notes after the market close on Wednesday at par at the rich end of talk with a coupon of 0.5% and an initial conversion premium of 42.5%.

Price talk was for a coupon of 0.5% to 1% and an initial conversion premium of 37.5% to 42.5%, according to a market source.

The new paper dominated activity in the secondary space and was making large gains on an outright and dollar-neutral, or hedged, basis.

The 0.5% notes traded up to 104 out of the gate.

They expanded upwards of 2.5 points dollar-neutral, a source said.

Shift4’s stock was changing hands at $87.55, an increase of 1.59%, shortly before 11 a.m. ET.

The company previously planned to price a concurrent secondary offering of 7 million shares with the company planning to offer 1,791,818 shares and entities associated with Searchlight Capital Partners LP offering 5,208,182 shares.

However, the company canceled the secondary offering.

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