Morning Commentary: Rivian Automotive, Liberty Media convertible offerings on tap

By Abigail W. Adams

Portland, Me., March 7 – The convertibles primary market roared into the first full week of March with two deals totaling $1.8 billion on deck.

Rivian Automotive Inc. plans to price $1.3 billion of six-year green convertible notes and Liberty Media Corp. plans to price $500 million of five-year convertible notes after the market close on Tuesday.

The deals looked cheap based on underwriters’ assumptions, sources said.

Rivian looks cheap

Rivian plans to price $1.3 billion of six-year green convertible notes after the market close on Tuesday with price talk for a coupon of 4.125% to 4.625% and an initial conversion premium of 37.5% to 42.5%.

The deal was heard to be in the market with assumptions of an 850 basis points credit spread and a 45% vol., a source said.

Using those assumptions, the deal was pegged as 1.25 points cheap at the midpoint of talk.

Liberty Media refinancing

Liberty Media plans to sell $500 million of five-year convertible notes after the market close on Tuesday with price talk for a coupon of 3.5% to 4% and a fixed initial conversion premium of 30%.

The notes are convertible into Liberty Media’s series A Liberty SiriusXM common stock.

The deal was heard to be in the market with assumptions of a 325 bps credit spread and a 24% vol., according to a market source.

The deal modeled cheap, but the market is saturated with Liberty paper and the latest “John Malone special” was not particularly interesting, a source said.

Malone is the chairman of Liberty Media, which is a frequent issuer in the convertible bond market.

However, the deal is coming as a refinancing with proceeds to be used to repurchase Liberty’s 1.375% cash convertible notes due 2023 in privately negotiated transactions and settle exchanges or repurchases or redeem the company’s 2.125% exchangeable senior debentures due 2048.

The deal was expected to do well with the refinancings driving demand for the new offering.

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