Convertibles secondary supply surges; Camtek, Arrival, Affirm gain; Bilibili contracts

By Abigail W. Adams

Portland, Me., Nov. 19 – It was an active morning in the convertibles secondary space as $3.35 billion in new supply from Camtek Ltd., Arrival SA, Bilibili Inc. and Affirm Holdings Inc. flooded the aftermarket.

The new paper was in demand during bookbuilding with three of the four deals upsizing and two pricing tighter than talk.

However, their performance in the secondary space was mixed. While new paper from Camtek, Arrival and Affirm were all making gains on an outright and dollar-neutral basis, Bilibili’s new notes were flat outright and contracted dollar-neutral.

Camtek tucked away

Camtek priced an upsized $175 million of five-year convertible notes after the market close on Thursday at par with a coupon of 0% and an initial conversion premium of 30%.

The deal came in line with talk for a fixed coupon of 0% and richer than talk for an initial conversion premium of 22.5% to 27.5%.

The greenshoe was also upsized to $25 million.

The initial size of the offering was $140 million with a greenshoe of $20 million.

The new paper was not active early in the session with only a few trades on the tape.

“Those must have been put away,” a source said.

While volume was light, the 0% notes that did trade were up to 103 early in the session.

They were changing hands at 103.75 versus a stock price of $44.38 in the late afternoon.

The notes expanded 4 points dollar-neutral, a source said.

There was about $8 million in reported volume.

Camtek’s stock traded to a low of $42.89 and a high of $45.25 before closing the day at $44.69, a decrease of 0.6%.

Arrival skyrockets

Arrival priced an upsized $275 million offering of five-year convertible notes after the market close on Thursday at par with a coupon of 3.5% and an initial conversion premium of 25%.

Pricing came at the midpoint of talk for a coupon of 3.25% to 3.75% and an initial conversion premium of 22.5% to 27.5%.

The greenshoe was also upsized to $45 million.

The initial size of the offering was $200 million with a greenshoe of $30 million.

The new paper skyrocketed on debut.

The notes were changing hands at 110.375 versus a stock price of $10.73 early in the session.

They were changing hands at 107 versus a stock price of $10.14 in the late afternoon.

The notes gained 6 points dollar-neutral, a source said.

There was about $61 million in reported volume.

The outperformance of the notes was attributed to the cheapness of the deal.

Based on underwriters’ assumptions of 850 basis points over Libor and a 45% vol., the deal looked 8 points cheap at the midpoint of talk.

Arrival’s stock traded to a low of $9.86 and a high of $10.84 before closing the day at $10.50, an increase of 5.95%.

Affirm in focus

Affirm priced an upsized $1.5 billion of five-year convertible notes after the market close on Thursday at par with a coupon of 0% and an initial conversion premium of 55%.

Pricing came at the rich end of initial price talk for a coupon of 0% to 0.25% and richer than initial price talk for an initial conversion premium of 47.5% to 52.5%, according to a market source.

The greenshoe was also upsized to $225 million.

The initial size of the offering was $1.25 billion with a greenshoe of $187.5 million.

The new paper was putting in a strong performance on both an outright and dollar-neutral basis.

The 0% notes were changing hands at 100.875 versus a stock price of $135.69 early in the session.

They were trading just shy of 101 versus a stock price of $135.68 in the late afternoon.

The notes expanded about 1.5 points dollar-neutral, a source said.

There was $248 million in reported volume.

Affirm’s stock traded to a low of $133.45 and a high of $139.13 before closing the day at $136.16, a decrease of 2.13%.

Bilibili contracts

Bilibili priced $1.4 billion of five-year convertible notes after the market close on Thursday at par with a coupon of 0.5% and an initial conversion premium of 40%, according to a company news release.

Pricing came at the cheap end of talk for a coupon of 0% to 0.5% and an initial conversion premium of 40% to 45%, according to a market source.

The new paper was below par early in the session.

The 0.5% notes were trading at 99.625 versus an equity price of $67.39 early in the session.

They broke above par as the session progressed and were seen changing hands at 100.125 versus an equity price of $67 in the late afternoon.

However, the notes contracted about 0.25 point dollar-neutral, a source said.

There was $125 million in reported volume.

Bilibili’s American Depositary Shares traded to a low of $66.01 and a high of $67.95 before closing the day flat at $67.12.

Mentioned in this article:

Arrival SA Nasdaq: ARVL

Affirm Holdings Inc. Nasdaq: AFRM

Bilibili Inc. Nasdaq: BILI

Camtek Ltd. Nasdaq: CAMT

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