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Morning Commentary: DigitalOcean, Marathon Digital surface with convertible bond plans
Chicago, Nov. 15 – The convertibles primary market started the week with two announced deals on Monday morning.
DigitalOcean, Inc. is in the Monday market with $900 million of convertible notes and Marathon Digital Holdings, Inc. is bringing a $500 million cryptocurrency offering, engendering the expected enthusiasm from a source that comes with crypto deals these days.
A market source noted that the primary pipeline is expected to be active throughout the week.
DigitalOcean
DigitalOcean is working to sell $900 million of new five-year convertibles notes with a 0% to 0.5% coupon and an initial conversion premium that is expected to be between 40% and 45%.
The offering is expected to price after the market close on Monday.
The deal was heard to be in the market with assumptions of 300 basis points over Libor and a 45% vol., according to a market source.
Using those assumptions, the Rule 144A deal looked 2.34 points cheap at the midpoint of talk.
The offering will have a $135 million greenshoe.
J.P. Morgan Securities LLC, Goldman Sachs & Co. LLC and Morgan Stanley & Co. LLC are active bookrunners.
Proceeds will be used for the repurchase of up to $300 million of common stock concurrently with the offering and for general corporate purposes.
Marathon
Bringing that cryptocurrency-based new offer, Marathon Digital Holdings intends to sell $500 million of 1% convertible notes with an initial conversion premium cited at 35%.
The notes are expressly in the market with a coupon that could come between 0.75% and 1.25%, and the initial conversion premium is expected between 32.5% and 37.5%.
The deal was circulating with assumptions of 550 bps over Libor and a 45% vol., a market source told Prospect News.
Using the 1% coupon and an announced 35% conversion premium, the deal was modeling 1.14 points cheap.
Jefferies LLC is working as the bookrunner for the Bitcoin miner.
The offering has a $75 million greenshoe.
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