Cerevel Therapeutics on deck; Post, Liberty Media convertible notes expand on debut

By Abigail W. Adams

Portland, Me., Aug. 10 – The convertibles primary market continued to churn out new offerings with one deal on deck after $925 million priced in two deals post-close on Tuesday.

Cerevel Therapeutics Holdings Inc. plans to price $250 million of five-year convertible notes after the market close on Thursday with price talk for a coupon of 2.75% to 3.25% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

Morgan Stanley & Co. LLC, Goldman Sachs & Co. LLC, Jefferies LLC and Evercore are bookrunners for the Rule 144A offering, which carries a greenshoe of $37.5 million.

Liberty Media Corp. priced an upsized $425 million offering of five-year convertible notes and Post Holdings Inc. priced an upsized $500 million of five-year convertible notes after the market close on Tuesday.

The new paper hit the convertible secondary space on a strong day for the market with July’s Consumer Price Index report coming in below expectations.

Both issues made large gains on an outright and dollar-neutral basis as equity indexes resumed their upward momentum.

The Dow Jones industrial average closed Wednesday up 535 points, or 1.63%, the S&P 500 index closed up 2.13%, the Nasdaq Composite index closed up 2.89% and the Russell 2000 index closed up 3%.

“The tone has definitely improved,” a source said.

The convertibles secondary space, in general, added 0.5 point dollar-neutral in the rally.

There was an uptick in trading volume with $680 million on the tape about one hour before the market close.

However, the new paper accounted for nearly one-third of Wednesday’s total reported volume.

Royal Caribbean Group’s recently priced 6% convertible notes due 2025 added to their gains in active trading on a strong day for the company’s stock and credit.

Liberty expands

Liberty Media priced an upsized $425 million, from $375 million, offering of five-year convertible notes after the market close on Tuesday at par with a coupon of 2.25% and an initial conversion premium of 30%.

Pricing came at the rich end of talk for a coupon of 2.25% to 2.75% and at the midpoint of talk for an initial conversion premium of 27.5% to 32.5%.

The notes will be convertible into Liberty’s series C Liberty Formula One common stock and will be attributed to the Liberty Formula One tracking group.

The new paper jumped out of the gate.

The notes traded up to 103.75 shortly after the opening bell and continued to gain as the session progressed.

They were changing hands at 104.75 versus a stock price of $68.95 in the late afternoon.

The notes expanded about 2.5 points dollar-neutral, a source said.

There was $104 million in reported volume in the late afternoon.

Liberty Formula One’s common stock traded to a low of $66.90 and a high of $69.72 before closing the day at $69.49, an increase of 4.97%.

Liberty Media’s latest offering was a refinancing with proceeds to be used to repurchase approximately $209 million in principal amount of Liberty’s 1% cash convertible notes due 2023 in privately negotiated transactions.

There were several prints of the 1% notes at 180.96 early in the session, which appeared to be their buyback price.

Post jumps

Post Holdings priced an upsized $500 million of five-year convertible notes after the market close on Tuesday at par with a coupon of 2.5% and an initial conversion premium of 17.5%.

Pricing came at the midpoint of talk for a coupon of 2.25% to 2.75% and at the cheap end of talk for an initial conversion premium of 17.5% to 22.5%.

The greenshoe was also upsized to $75 million.

The initial size of the offering was $400 million with a greenshoe of $60 million.

The deal was in the market with assumptions of 325 bps over Libor and a 24% vol., a source said.

Using those assumptions, the deal looked 1.28 points cheap at the midpoint of talk.

However, the offering was wall-crossed, a source said, and priced shortly after launching.

The new paper skyrocketed on debut, despite a red day for the company’s stock.

The 2.5% notes were changing hands at 102.5 versus a stock price of $85.67 in the late afternoon.

They expanded 5.25 points dollar-neutral, a source said.

There was $109 million in reported volume.

Post’s stock traded to a high of $89.50 and a low of $85.10 before closing the day at $85.98, a decrease of 4.77%.

Royal Caribbean gains

Royal Caribbean’s recently priced 6% convertible notes due 2025 added to their gains in active trading on Wednesday on a strong day for the company’s stock and credit.

The 6% notes jumped more than 6 points outright with stock up more than 9%.

They were changing hands at 113.375 versus a stock price of $42.01 in the late afternoon, according to a market source.

There was $12 million in reported volume.

While flat on swap early in the session, the notes added to their dollar-neutral gains by the market close.

Royal Caribbean’s stock traded to a high of $42.53 and a low of $39.42 before closing the day at $41.68, an increase of 9.71%.

Mentioned in this article:

Cerevel Therapeutics Holdings Inc. Nasdaq: CERE

Liberty Media Corp. Nasdaq: FWONK

Post Holdings Inc. NYSE: POST

Royal Caribbean Group NYSE: RCL

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