Morning Commentary: Bill.com, RBC Bearings convertibles jump on debut; Inotiv on tap

By Abigail W. Adams

Portland, Me., Sept. 22 – New convertible paper was in focus on Wednesday with $900 million in new supply entering the secondary space and one more offering set to price after the market close.

Inotiv Inc. plans to price $110 million of six-year convertible notes after the market close on Wednesday. The deal looked cheap based on underwriters’ assumptions.

Bill.com Holdings Inc. priced $500 million of six-year convertible notes and RBC Bearings Inc. priced $400 million par-of-$100 three-year mandatory convertible preferred stock after the market close on Tuesday.

The new paper was in focus and performing well with equity markets seeing a strong open in the run up to the Federal Reserve’s announcement in the afternoon.

Inotiv looks cheap

Inotiv plans to price $110 million of six-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 30% to 35%, according to a market source.

The deal was heard to be in the market with assumptions of 800 basis points over Libor and a 38% vol., according to a market source.

Using those assumptions, the deal looked 2.61 points cheap at the midpoint of talk.

Bill.com jumps

Bill.com priced $500 million of six-year convertible notes after the market close on Tuesday at par with a coupon of 0% and an initial conversion premium of 52.5%.

Pricing came in line with revised talk for a fixed coupon of 0% and at the cheap end of revised talk for an initial conversion premium of 52.5% to 55%, according to a market source.

Talk tightened from initial price talk for a coupon of 0% to 0.25% and an initial conversion premium of 45% to 50%.

Concurrently, the company sold an upsized $1.2 billion, or 4,411,765 shares, of common stock at a public offering price of $272 per share in a registered offering.

The secondary offering carries a greenshoe of 661,764 shares or $180 million. The initial size of the secondary offering was $1 billion with a greenshoe of $150 million.

The new 0% notes were putting in a strong performance early in the session.

They were changing hands at 104 on an outright basis and expanding dollar-neutral, a source said.

Bill.com’s stock was trading at $275.28, an increase of 0.42%, shortly before 11 a.m. ET.

RBC Bearings gains

RBC Bearings priced $400 million par-of-$100 three-year mandatory convertible preferred stock after the market close on Tuesday at par with a dividend of 5% and a threshold appreciation premium of 22.5%.

Pricing came at the rich end of talk for a dividend of 5% to 5.5% and at the midpoint of talk for a threshold appreciation premium of 20% to 25%, according to a market source.

Concurrently, the company priced a secondary offering of 3 million shares of common stock at a public offering price of $185. The secondary offering carries a greenshoe of 450,000 shares.

The mandatory convertible preferreds were also putting in a strong performance.

They were changing hands at 102.75 early in the session.

RBC common stock was trading at $201.62, an increase of 6.51%, shortly before 11 a.m. ET.

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