Chegg on tap; GOL Linhas accelerates timing; Euronet dominates; Nio notes open up

By Abigail W. Adams

Portland, Me., March 20 – The convertibles primary market returned to action on Wednesday with one deal launching and another deal that has been on the forward calendar since last week accelerating timing.

Chegg Inc. plans to price $500 million of six-year convertible notes after the market close on Thursday with price talk for a coupon of 0.125% to 0.625% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

Morgan Stanley & Co. LLC, BofA Merrill Lynch and Allen & Co. LLC are joint bookrunners for the Rule 144A deal, which carries a greenshoe of $75 million.

GOL Linhas Aereas Inteligentes SA accelerated the timing on its $300 million five-year exchangeable notes offering with pricing now expected after the market close on Thursday, according to a market source.

While there is promise of new paper before the week draws to a close, secondary trading was relatively light on Wednesday with no new paper entering the space and all eyes on the Federal Reserve for future indications about interest rates.

There was about $60 million on the tape about one hour into Wednesday’s session and $350 million on the tape by the late afternoon.

Trading activity continued to focus on a single issue – Euronet Worldwide Inc.’s 0.75% convertible notes due 2049. The notes continued to richen in secondary trading.

Pluralsight Inc.’s recently priced 0.375% convertible notes due 2024 also some saw activity with the notes gaining on an outright basis alongside stock.

Nio Inc.’s 4.5% convertible notes due 2024 saw a large dollar-neutral expansion on Wednesday with the notes continuing to improve alongside their borrow.

AMAG Pharmaceuticals Inc.’s 3.25% convertible notes due 2022 were active early in the session although with little movement in price.

GOL Linhas accelerates

GOL Linhas accelerated timing on its $300 million offering of five-year exchangeable notes with pricing now expected after the market close on Thursday.

The deal was initially slated to price after the market close on March 25.

Price talk on the offering remained unchanged with a coupon of 3.75% to 4.25% and an initial conversion premium of 30% to 40%.

Underwriters are marketing the deal with a credit spread of 575 basis points over Libor and a 40% vol., according to a market source.

Sources pegged the deal up to 8 points cheap based on those assumptions. However, the borrow on the Sao Paulo-based airline services provider is difficult.

The deal is pricing concurrently to a borrow facility to help facilitate hedging activity.

Euronet in focus

Euronet Worldwide’s 0.75% convertible notes due 2049 remained the most actively traded convertible bond in the secondary space on Wednesday with the notes continuing their expansion.

The notes were hovering around 107 on Wednesday with stock off for most of the session, sources said. More than $40 million of the bonds were on the tape by the late afternoon.

Euronet stock closed Wednesday at $137.67, a decrease of 1.98%.

The notes have been active and posting gains in high-volume activity for most of the week.

The investment-grade status of the notes is continuing to drive the notes richer, sources said.

Pluralsight improves

Pluralsight’s recently priced 0.375% convertible notes due 2024 also saw a fresh round of trading activity on Wednesday with the notes also improving.

The 0.375% notes gained 1.375 points outright to trade north of 106, a market source said.

More than $15 million of the bonds were on the tape by the late afternoon.

Pluralsight stock was also posting gains.

Stock closed Wednesday at $31.70, an increase of 2.03%.

Nio expands

Nio’s 4.5% convertible notes due 2024 saw another large expansion on Wednesday with the notes continuing to improve alongside the borrow on the equity.

The notes gained about 1 point outright to 93. They were expanded 1.25 points dollar-neutral, a market source said.

Nio’s American Depositary Shares closed Wednesday at $5.85, a decrease of 1.85%.

Nio’s convertibles have steadily gained on a dollar-neutral basis since the lock-up on the Shanghai-based electric car manufacturer’s ADS came to an end.

The 4.5% notes had been trading on a two-tier system based on those who were able to borrow through the borrow facility and those that were not.

However, that is no longer the case with the lock-up period over. With the borrow improving, the notes are expected to open up even more, sources said.

AMAG flat

AMAG’s 3.25% convertible notes due 2022 saw a fresh round of trading activity early in Wednesday’s session, although activity tapered into the afternoon.

However, there was little movement in price.

The convertible notes were changing hands at 85.75, a market source said. More than $4 million of the bonds were on the tape by the late afternoon.

AMAG stock closed Wednesday at $12.47, an increase of 0.08%.

AMAG’s convertible notes have been under pressure since mid-March when its clinical trial for Makena, a treatment for premature birth, failed to meet its end goals.

Mentioned in this article:

AMAG Pharmaceuticals Inc. Nasdaq: AMAG

Chegg Inc. NYSE: CHGG

Euronet Worldwide Inc. Nasdaq: EEFT

GOL Linhas Aereas Inteligentes SA NYSE: GOL

Nio Inc. NYSE: NIO

Pluralsight Inc. Nasdaq: PS

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