Morning Commentary: Rexford exchangeable notes up outright; Cardlytics expands on debut

By Abigail W. Adams

Portland, Me., March 27 – New paper was in focus on Wednesday as $1.15 billion in new supply made its way into the convertibles secondary space.

Rexford Industrial Realty, LP priced its $1 billion two-tranche offering of exchangeable notes (Baa2/BBB+/BBB+) and Cardlytics Inc. priced $150 million of five-year convertible notes after the market close on Tuesday.

The new paper hit the secondary space on a mixed open for equities with the tech heavy Nasdaq underperforming.

The Dow Jones industrial average was up 241 points, or 0.61%, the S&P 500 index was up 0.30%, the Nasdaq Composite index was up 0.04% and the Russell 2000 index was up 0.80% shortly before 11 a.m. ET.

The new paper dominated activity in the secondary space.

While Rexford’s exchangeable notes were up outright, they were moving largely in line on a dollar-neutral, or hedged, basis.

However, Cardlytics’ new notes were the “winner,” a source said, and made large outright and dollar-neutral gains on debut.

Rexford up in line

Rexford priced a $500 million tranche of three-year exchangeable notes and a $500 million tranche of five-year exchangeable notes after the market close on Tuesday.

The three-year notes priced with a coupon of 4.375% and an initial exchange premium of 30%.

Pricing came at the cheap end of talk for a coupon of 3.875% to 4.375% and an initial exchange premium of 30% to 35%.

The five-year tranche priced with a coupon of 4.125% and an initial exchange premium of 30%.

Pricing came at the midpoint of talk for a coupon of 3.875% to 4.375% and at the cheap end of talk for an initial exchange premium of 30% to 35%.

Both tranches were trading up on an outright basis on a strong open for stock.

The 4.375% exchangeable notes due 2027 were changing hands at 100.875 early in the session, a source said.

They were moving in line dollar-neutral.

The 4.125% exchangeable notes due 2029 were slightly outpacing their shorter-duration counterpart.

The notes were trading at 101.125 early in the session.

They were flat to up about 0.25 point dollar-neutral, a source said.

Rexford’s stock was trading at $49.48, an increase of 1.95%, shortly before 11 a.m. ET.

Cardlytics a winner

Cardlytics priced $150 million of five-year convertible notes after the market close on Tuesday at par with a coupon of 4.25% and an initial conversion premium of 32.5%.

Pricing came at the midpoint of talk for a coupon of 4% to 4.5% and at the rich end of talk for an initial conversion premium of 27.5% to 32.5%.

The notes were the “winner of the day,” a source said.

They were making large gains on an outright and dollar-neutral basis.

The notes traded up to 104 with stock flat early in the session.

They expanded several points dollar-neutral.

Cardlytics’ stock was changing hands at $13.64, an increase of 0.26%, shortly before 11 a.m. ET.

The small offering was coming as a refinancing with the company repurchasing $183.9 million in principal of the company’s outstanding 1% convertible notes due 2025 for approximately $169.3 million in cash in privately negotiated transactions.

The buyback price appeared to be at 92, a source said.

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