Carnival convertibles on deck; Envestnet jumps on debut; Sea gains; LendingTree active

By Abigail W. Adams

Portland, Me., Nov. 15 – The convertibles primary market continued to churn out offerings on Tuesday with Carnival Corp. returning to the convertibles market with a $1 billion offering.

Carnival plans to price $1 billion of five-year convertible notes with price talk for a coupon of 5.25% to 5.75% and an initial conversion premium of 20% to 25%, according to a market source.

The overnight deal was set to price shortly after launching with books closing at 6:30 p.m. ET.

The deal comes after Envestnet Inc. priced an upsized $500 million of five-year convertible notes after the market close on Monday in a deal that played to heavy demand during bookbuilding.

The new paper made its aftermarket debut on a strong day for equities and jumped on an outright and dollar-neutral basis.

Equities resumed their rally on Tuesday as the latest economic data point indicated inflation was cooling.

The latest Producer Price Index report came in below expectations and equities once again catapulted higher on dovish pivot hopes from the Federal Reserve.

While indexes closed well off the highs of the day, they remained firmly in positive territory with the Dow Jones industrial average up 56 points, or 0.17%, the S&P 500 index up 0.87%, the Nasdaq Composite index up 1.45% and the Russell 2000 index up 1.5%.

There was $534 million in reported volume about one hour before the market close with Envestnet accounting for about one-fifth of the total reported volume.

While activity paled in comparison, Sea Ltd.’s 0.25% convertible notes due 2026 were also active with the notes on the rise on an outright basis as equity surged following a large earnings beat.

LendingTree Inc.’s 0.5% convertible notes due 2025, an issue that rarely trades in volume, were among the most actively traded of Tuesday’s session although with little movement in price.

Envestnet in focus

Envestnet priced an upsized $500 million of five-year convertible notes after the market close on Monday at par at the rich end of talk with a coupon of 2.625% and an initial conversion premium of 32.5%.

Price talk was for a coupon of 2.625% to 3.125% and an initial conversion premium of 27.5% to 32.5%.

The greenshoe was also upsized to $75 million.

The initial size of the offering was $350 million with a greenshoe of $52.5 million.

The deal played to massive demand during bookbuilding and jumped out of the gate.

The 2.625% convertible notes traded up to a 102-handle shortly after the opening bell, which is where they remained for the duration of the session.

The notes were changing hands at 102.5 versus a stock price of $56.93 in the late afternoon.

The notes expanded about 2 points on a dollar-neutral basis.

There was $99 million in reported volume with the notes heavily traded on swap, a source said.

Envestnet’s offering was the latest refinancing deal to hit the tape with proceeds used to help repurchase for cash $300 million in principal of its 1.75% convertible notes due 2023 for $312.4 million plus accrued interest and $200 million in principal of its 0.75% convertible notes due 2025 for $181.8 million plus accrued interest.

Envestnet’s outstanding convertible notes were active on the buybacks.

There were several prints of the 1.75% convertible notes due 2023 at 104.125 and of the 0.75% convertible notes due 2025 at 90.886, which appeared to be the buyback prices, a source said.

Holders of the 0.75% convertible notes saw large gains as a result of the buybacks with the notes gaining 4 points from their previous level, a source said.

Envestnet’s stock traded to a low of $54.90 and a high of $57.20 before closing the day at $56.89, an increase of 2.75%.

Sea gains

Sea’s struggling 0.25% convertible notes due 2026 made large gains on Tuesday as stock skyrocketed following a large earnings beat.

The 0.25% notes were up 3 points outright with stock up 36%.

They were changing hands at 71.5 versus a stock price of $64 in the late afternoon.

The yield on the notes was just north of 9.25%.

The conversion premium on the notes is “massive,” a source said, which is why the notes did not move more.

Sea’s American Depositary Shares traded to a low of $55.46 and a high of $65.65 before closing the day at $62.31, an increase of 36.05%.

The tech conglomerate’s equity surged following a large earnings beat with the company reporting losses per share of 66 cents versus analyst expectations for losses per share of 95 cents.

Revenue was $3.16 billion versus analyst expectations for revenue of $3.01 billion.

LendingTree active

LendingTree’s 0.5% convertible notes due 2025 were active although little changed on Tuesday.

The notes remained on a 69-handle throughout the session.

They were seen at 69.375 versus a stock price of $26.82 in the late afternoon.

The yield on the notes was about 14.875%.

There was $11 million in reported volume.

LendingTree’s stock traded to a high of $27.88 and a low of $26.14 before closing the day at $26.44, an increase of 2.92%.

Mentioned in this article:

Carnival Corp. NYSE: CCL

Envestnet Inc. NYSE: ENV

LendingTree Inc. Nasdaq: TREE

Sea Ltd. NYSE: SE

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