MicroStrategy on tap; Coinbase volatile outright, up on hedge; Fisker trades for pennies

By Abigail W. Adams

Portland, Me., March 14 – The crypto craze continued to sweep through the convertibles primary and secondary markets with MicroStrategy Inc. slated to price its second convertible notes offering in as many weeks post-close Thursday and Coinbase Global Inc.’s heavily sought after deal making its aftermarket debut.

After pricing an $800 million offering last Tuesday, MicroStrategy has returned to the market with a $500 million offering of seven-year convertible notes with proceeds to again be used to up the company’s Bitcoin holdings.

MicroStrategy’s latest deal comes with slightly tighter terms than last week’s offering but still modeled cheap and was heard to be playing to heavy demand.

While market players eyed MicroStrategy’s latest offering, new paper from Coinbase made its aftermarket debut.

Coinbase’s offering was heavily oversubscribed with the deal upsizing and the coupon pricing through the rich end of initial talk.

The new paper hit the secondary space on a weak day for equities and a volatile day for Bitcoin.

The Dow Jones industrial average closed Thursday down 138 points, or 0.35%, the S&P 500 index closed down 0.29%, the Nasdaq Composite index closed down 0.30% and the Russell 2000 index closed down 1.96%.

Bitcoin hit a new all-time high of $73,650 early Thursday although it pulled back and was trading at $70,586.54, a decrease of 3.67%, shortly after the close of U.S. equity markets.

There was $183 million in reported convertible bond trading volume about one hour into the session and $657 million on the tape in the late afternoon with the market “a little sloppy,” a source said.

However, Coinbase’s new notes dominated activity.

While the notes were volatile on an outright basis, they saw a large dollar-neutral expansion on debut.

Outside of the crypto mania, Fisker Inc.’s 2.5% convertible notes due 2026 saw heavy volume with holders dumping the notes following media reports that the EV startup was preparing a bankruptcy filing.

The 2.5% notes sank to pennies on the dollar although they have long-traded with the expectation of bankruptcy.

MicroStrategy deja vu

MicroStrategy plans to price $500 million of seven-year convertible notes after the market close on Thursday with price talk for a coupon of 0.375% to 0.875% and an initial conversion premium of 40% to 45%.

The deal was heard to be in the market with assumptions of 350 basis points over SOFR and a 50% vol.

Using those assumptions, the deal looked about 2 points cheap at the midpoint of talk, a source said.

MicroStrategy’s latest offering may have been the quickest re-tap of the market on record with the company pricing $800 million of 0.625% convertible notes due 2030 on March 5.

The latest offering is coming with slightly tighter terms.

Price talk for MicroStrategy’s 2030 convertible notes was for a coupon of 0.5% to 1% and an initial conversion premium of 37.5% to 42.5%.

The notes priced at par with a coupon of 0.625% and an initial conversion premium of 42.5%.

However, the previous offering was marketed with the same assumptions and also modeled 2 to 2.5 points cheap at the midpoint of talk.

With the 0.625% convertible notes due 2030 already in-the-money, MicroStrategy’s latest deal was heard to be playing to strong demand.

The 0.625% convertible notes were coming in on Thursday after their explosive gains of the past week.

The 0.625% notes were trading at 135.375 versus a stock price of $1,659 early in the session.

They were seen at 134.125 versus a stock price of $1,679 in the late afternoon.

The notes contracted about 1 point dollar-neutral, a source said.

“They’re realigning because of the new ones,” the source said.

There was $10 million in reported volume.

MicroStrategy’s stock traded to a low of $1,550.77 and a high of $1,746 before closing at $1,676.85, a decrease of 5.06%.

Proceeds from the latest offering will also be used to purchase Bitcoin.

The company announced late last week that it had purchased 12,000 additional Bitcoin for $821 million using proceeds from its convertible notes offering.

MicroStrategy’s total Bitcoin holding was 205,000 following last week’s purchase.

Coinbase volatile

In a deal that played to hot demand, Coinbase priced an upsized $1.1 billion of six-year convertible notes after the market close on Wednesday at par with a 0.25% coupon and an initial conversion premium of 32.5%.

Pricing came through the rich end of talk for a coupon of 0.5% to 1% and at the rich end of talk for an initial conversion premium of 27.5% to 32.5%.

The greenshoe was also upsized to $165 million.

The initial size of the offering was $1 billion with a greenshoe of $150 million.

The deal played to heavy demand with the offering heard to be as much as 5x oversubscribed, a source said.

The new paper dominated activity in the secondary space.

While volatile on an outright basis, the 0.25% convertible notes maintained a large dollar-neutral expansion throughout the session.

The notes were marked at 102.375 bid, 102.875 offered out of the gate and traded as high as 103 with stock up shortly after the opening bell.

However, the notes dived as low as 98 as Coinbase’s stock plunged 6% a short time later.

The notes regained their footing and traded back up to par shortly before 11 a.m. ET.

However, they again fell to a 98-handle as the session progressed.

The notes were trading at 98.5 versus a stock price of $232 in the late afternoon.

They expanded 2 to 2.5 points dollar-neutral, sources said.

There was $203 million in reported volume.

Coinbase’s stock traded to a low of $227.24 and a high of $248.27 before closing at $233.67, off 7.17%.

Fisker for pennies

News that Fisker was preparing a bankruptcy filing sparked activity in the EV start-up’s 2.5% convertible notes due 2026, which were trading for pennies on the dollar.

The 2.5% notes sank 2 to 3 points to trade in the 3 to 4 context in heavy volume.

The yield was over 200%, a source said.

There was $15 million in reported volume.

The market has long anticipated the company would not survive with the 2.5% convertible notes dropping into the single digits in February, sources said.

Mentioned in this article:

Coinbase Global, Inc. Nasdaq: COIN

Fisker Inc. NYSE: FSR

MicroStrategy Inc. Nasdaq: MSTR

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