Morning Commentary: Rexford Industrial Realty, Cardlytics convertibles offerings eyed

By Abigail W. Adams

Portland, Me., March 26 – The convertibles primary market returned to action with two new offerings slated to price after the market close on Tuesday.

Rexford Industrial Realty Inc. is on deck with a $1 billion two-tranche offering of exchangeable notes (Baa2/BBB+/BBB+) and Cardlytics Inc. plans to price $150 million of five-year convertible notes.

There was little doubt the deals would get done with Rexford a solid credit and Cardlytics coming as a refinancing.

However, the deals did not generate much enthusiasm with Rexford the latest high-grade name to tap the market and Cardlytics a small offering that is expected to play to a limited audience.

Rexford on deck

Rexford Industrial Realty plans to price a $1 billion two-tranche offering of exchangeable notes (Baa2/BBB+/BBB+) after the market close on Tuesday, according to a market source.

The offering consists of a $500 million three-year tranche with price talk for a coupon of 3.875% to 4.375% and an initial exchange premium of 30% to 35%.

There is also a $500 million tranche of five-year notes that are talked with a coupon of 3.875% to 4.375% and an initial exchange premium of 30% to 35%.

The three-year tranche was heard to be in the market with assumptions of 125 basis points over SOFR and a 23% vol.

The five-year tranche was marketed with assumptions of 175 bps over SOFR and a 23% vol.

Cardlytics eyed

Cardlytics plans to price $150 million of five-year convertible notes after the market close on Tuesday with price talk for a coupon of 4% to 4.5% and an initial conversion premium of 27.5% to 32.5%.

The deal was heard to be in the market with assumptions of 950 bps over SOFR and a 45% vol.

The deal was coming as a refinancing with proceeds to be used to repurchase for a cash a portion of the company’s outstanding 1% convertible notes due 2025.

The deal was pure opportunism with the company pushing through a refinancing after stock hit a new 52-week high on Monday, a source said.

However, stock was taking a hit on the heels of the new offering and traded down to $14.24, a decrease of 29.09%, shortly before 11 a.m. ET.

Cardlytics’ stock has more than doubled since the company reported earnings on March 14 with stock still up more than 100% over the past month despite the sell-off early Tuesday.

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