Morning Commentary: MGP Ingredients eyed; Amyris, Cryoport convertibles hit secondary

By Abigail W. Adams

Portland, Me., Nov. 10 – New convertible bonds were in focus on Wednesday with one $175 million offering slated to price after the market close and $950 million in two new deals hitting the aftermarket.

MGP Ingredients Inc.’s $175 million offering of convertible notes due 2041 looked cheap based on underwriters’ assumptions. The long-duration notes are a unique structure.

As market players eyed the new deal in the pipeline, new paper from Cryoport Inc. and Amyris Inc. made their aftermarket debut.

The deals were in demand during bookbuilding with both offerings upsizing and pricing rich.

The demand followed the notes into the secondary space with both seeing large dollar-neutral expansions.

MGP Ingredients eyed

MGP Ingredients plans to price $175 million of convertible notes due 2041 after the market close on Wednesday with price talk for a coupon of 1.5% to 2% and an initial conversion premium of 35% to 40%.

The deal was heard to be in the market with assumptions of 375 basis points over Libor and a 35% vol., according to a market source.

Using those assumptions, the deal looked 2.87 points cheap at the midpoint of talk.

The structure of the offering was unique with the notes essentially five-year paper because of their put date.

The notes are putable on Nov. 15, 2026, Nov. 15, 2031 and Nov. 15, 2036 or upon a change of control.

While the structure has been utilized in the past, it is not common, a source said.

There may be tax benefits to structuring the deal as long-dated paper.

Amyris volatile

Amyris priced an upsized $600 million of five-year convertible notes after the market close on Tuesday at par at the rich end of talk with a coupon of 1.5% and an initial conversion premium of 35%.

Price talk was for a coupon of 1.5% to 2% and an initial conversion premium of 30% to 35%, according to a market source.

The greenshoe was also upsized to $90 million. The initial size of the offering was $400 million with a greenshoe of $60 million.

The new paper was volatile on an outright basis.

The 1.5% notes traded as high as 102 out of the gate, briefly dropped below par before again rallying to trade around 101.75, a source said.

While volatile outright, the notes maintained a large dollar-neutral expansion. They were seen up 1.5 to 2 points on hedge.

Amyris’ stock traded to a low of $7.32 early in the session. They were changing hands at $7.80, a decrease of 1.95% shortly before 11 a.m. ET.

Cryoport expands

Cryoport priced an upsized $350 million of five-year convertible notes after the market close on Tuesday at par at the rich end of talk with a coupon of 0.75% and an initial conversion premium of 45%.

Price talk was for a coupon of 0.75% to 1.25% and an initial conversion premium of 40% to 45%, according to a market source.

The greenshoe was also upsized to $52.5 million.

The initial size of the offering was $300 million with a greenshoe of $45 million.

Concurrently, the company priced a secondary offering of 3,072,038 shares at a price of $81.10.

The new 0.75% notes were trading up on an outright and dollar-neutral basis.

They were changing hands in a tight range of 102.5 to 103 with stock off early in the session.

The notes expanded about 3 points dollar-neutral, a source said.

Cryoport’s stock was trading at $80.82, a decrease of 0.81%, shortly before 11 a.m. ET.

Proceeds from the new offering were used to repurchase $100.7 million of the principal amount of its 3% convertible notes due 2025 for $351.1 million.

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