Morning Commentary: Square, Liberty Media convertible offerings focus of primary market

By Abigail W. Adams

Portland, Me., Nov. 9 – The convertibles primary market returned to action on Monday with equity markets roaring at Monday’s open on the heels of president-elect Joseph R. Biden’s decisive victory and positive early data on Pfizer’s Covid-19 vaccine.

Two overnight offerings totaling $1.6 billion are on deck with both offerings looking cheap, sources said.

Square Inc. plans to price a $1 billion two-tranche offering of long five-year convertible notes and seven-year convertible notes after the market close on Monday.

The convertible notes due May 1, 2026 are talked with a coupon of 0% to 0.25% and an initial conversion premium of 55% to 60%.

The seven-year convertible notes are talked with a coupon of 0.25% to 0.75% and an initial conversion premium of 55% to 60%.

Underwriters were marketing the long five-year convertible notes with assumptions of 220 basis points over Libor and a 42% vol., according to a market source.

Using those assumptions, the deal looked 2.14 points cheap at the midpoint of talk.

The seven-year convertible notes were being marketed with assumptions of 245 bps over Libor and a 42% vol., which looked 1.15 points cheap at the midpoint of talk, a source said.

The deals on deck also include a new exchangeable offering from Liberty Media Corp., a serial issuer of convertible notes.

Liberty Media plans to price $600 million 30-year notes exchangeable for Live Nation Entertainment Inc.’s common stock after the market close on Monday with price talk for a coupon of 0.5% to 1% and an initial exchange premium of 37.5% to 42.5%, according to a market source.

The deal was heard to be marketed with assumptions of 350 bps over Libor and a 40% vol., which looked 5.25 points cheap at the midpoint of talk, a source said.

The offering comes as Live Nation’s stock surged more than 20% on the prospect of an imminent Covid-19 vaccine.

Live Nation stock jumped to $68.51, an increase of 22.21%, shortly before 11 a.m. ET.

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