Morning Commentary: Sea, RealPage, Model N, Tricida eyed; Gossamer Bio, Envista price

By Abigail W. Adams

Portland, Me., May 19 – The convertibles primary market continued to roll out new deals at an active clip with four deals totaling $1.625 billion set to price after the market close and two deals totaling $650 million making their aftermarket debut.

Sea Ltd. plans to price $1 billion of long five-year convertible notes, RealPage, Inc. plans to price $300 million of five-year convertible notes, Model N Inc. plans to sell $150 million of five-year convertible notes, and Tricida Inc. plans to price $175 million of seven-year convertible notes after the market close.

The deals continued to model cheap based on underwriters’ assumptions, sources said.

Meanwhile, new paper from Envista Holdings Corp. and Gossamer Bio Inc. made their aftermarket debut.

Envista’s convertible notes dominated activity in the secondary space but were trading largely flat.

Sea’s exchange

Sea plans to sell $1 billion of long five-year convertible notes after the market close on Tuesday with price talk for a coupon of 2.125% to 2.625% and an initial conversion premium of 30% to 35%.

The deal was heard to be in the market with assumptions of 750 basis points over Libor and a 40% vol., according to a market source.

Using those assumptions, the deal looked about 3 points cheap at the midpoint of talk.

In connection with the offering, the Singapore-based consumer internet company plans to exchange a portion of its 2.25% convertible notes due 2023 for cash, American Depositary Shares, or a combination of both in privately negotiated transactions.

Sea priced a $650 million issue of the 2.25% convertible notes due 2023 in June 2018.

The 2.25% notes trade at triple par, a market source said.

RealPage eyed

RealPage plans to price $300 million of five-year convertible notes after the market close on Tuesday with price talk for a coupon of 1.25% to 1.75% and an initial conversion premium of 27.5% to 32.5%.

The deal was heard to be in the market with assumptions of 500 bps over Libor and a 35% vol., according to a market source.

Using those assumptions, the deal looked 3.75 points cheap at the midpoint of talk.

Concurrently with the convertible notes, the company will price a secondary offering of up to $300 million of common stock.

Model N on deck

Model N plans to sell $150 million of five-year convertible notes after the market close on Tuesday with price talk for a coupon of 2.125% to 2.625% and an initial conversion premium of 27.5% to 32.5%.

The deal was heard to be in the market with assumptions of 800 bps over Libor and a 40% vol., according to a market source.

Using those assumptions, the deal looked about 2.875 points cheap at the midpoint of talk, a source said.

Tricida looks cheap

Tricida plans to price $175 million of seven-year convertible notes after the market close on Tuesday with price talk for a coupon of 3% to 3.5% and an initial conversion premium of 25% to 30%, according to a market source.

Underwriters were marketing the deal with assumptions of 1,000 bps over Libor and a 40% vol., according to a market source.

Using those assumptions, the deal looked almost 3 points cheap at the midpoint of talk, a source said.

Envista active

Envista Holdings priced an upsized $450 million of five-year convertible notes after the market close on Monday at par with a coupon of 2.375% and an initial conversion premium of 32.5%.

Pricing came at the cheap end of initial price talk for a coupon of 1.875% to 2.375% and at the midpoint of talk for an initial conversion premium of 30% to 35%, according to a market source.

The greenshoe was also upsized to $67.5 million.

The initial size of the deal was $400 million with a greenshoe of $60 million.

The new paper dominated activity in the secondary space but fell largely flat, a market source said.

The 2.375% notes were changing hands at 100.25 with stock up about 1%.

There was more than $44.5 million on the tape about one hour into the session.

Gossamer upsizes

Gossamer Bio priced an upsized $200 million of seven-year convertible notes after the market close on Monday at par with a coupon of 5% and an initial conversion premium of 22.5%.

Pricing came in line with talk for a fixed coupon of 5% and a fixed initial conversion premium of 22.5%, according to a market source.

The greenshoe was upsized to $30 million.

The initial size of the offering was $175 million with a greenshoe of $26.25 million.

The biopharmaceutical company also priced a secondary offering of $125 million, or 9,433,963 shares, at $13.25 a share.

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