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Morning Commentary: Convertibles primary prices two deals; NextGen jumps on debut
By Abigail W. Adams
Portland, Me., Oct. 28 – The convertibles primary market capped the week with two offerings pricing.
NextGen Healthcare Inc. priced an upsized $230 million of five-year convertible notes and New Mountain Finance Corp. sold $200 million of three-year convertible notes after the market close on Thursday.
While New Mountain’s offering was directly marketed and largely tucked away, new NextGen paper dominated the secondary space and skyrocketed on debut.
The new paper comes on a strong day for equity markets with indexes brushing off more disappointing earnings results from the tech sector to climb firmly into the green early in the session.
The Dow Jones industrial average was up 588 points, or 1.83%, the S&P 500 index was up 1.54%, the Nasdaq Composite index was up 1.63% and the Russell 2000 index was up 0.64% shortly after 11 a.m. ET.
New Mountain prices
New Mountain priced $200 million of three-year convertible notes after the market close on Thursday at par with a coupon of 7.5% and an initial conversion premium of 14.7%.
The refinancing deal was directly marketed to investors.
The new paper was not active in the secondary space early Friday.
“They’re most likely tucked away,” a source said.
NextGen jumps
NextGen sold an upsized $230 million, from $200 million, of five-year convertible notes after the market close on Thursday at par at the rich end of talk with a coupon of 3.75% and an initial conversion premium of 35%.
Price talk was for a coupon of 3.75% to 4.25% and an initial conversion premium of 30% to 35%.
The new paper played to solid demand during bookbuilding and jumped in heavy volume on its aftermarket debut.
The 3.75% notes traded up to 103.25 on an outright basis early in the session.
The notes expanded 2 points to 2.5 points dollar-neutral, a source said.
NextGen’s stock traded up to $19.15, an increase of 0.68%, shortly before 11 a.m. ET.
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