Morning Commentary: Shift4 Payments, LivePerson on tap; NextEra active, trades down

By Abigail W. Adams

Portland, Me., Dec. 1 – The convertibles primary market remained active on Tuesday with one more deal launching prior to the market open.

LivePerson Inc. plans to price $450 million of six-year convertible notes after the market close on Tuesday.

The deal joins Shift4 Payments Inc.’s $400 million offering of five-year convertible notes on the forward calendar.

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

Meanwhile, NextEra Energy Partners, LP’s newly priced convertible notes were active early in Tuesday’s session.

However, the notes were trading below their discounted reoffer price.

LivePerson on tap

LivePerson plans to price $450 million of six-year convertible notes after the market close on Tuesday with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 35% to 40%, according to a market source.

The deal was heard to be in the market with assumptions of 350 basis points over Libor and a 40% vol., which looked 1.89 points cheap at the midpoint of talk, a source said.

Using a slightly higher vol., another source pegged the deal 2.9 points cheap at the midpoint of talk.

Shift4 Payments eyed

Shift4 Payments plans to price $400 million of five-year convertible notes after the market close on Wednesday with price talk for a coupon of 0.25% to 0.75% and an initial conversion premium of 37.5% to 42.5%, according to a market source.

Underwriters were marketing the deal with assumptions of 400 bps over Libor and a 42% vol., according to a market source.

Using those assumptions, the deal looked 2.625 points cheap at the midpoint of talk.

Assuming a regular borrow, the assumptions looked “spot on,” a source said.

The deal is in the market until Wednesday, largely because of a concurrent equity offering.

Selling shareholders are also offering up to 8 million shares of common stock.

NextEra’s overnight

NextEra Energy Partners priced $600 million of five-year convertible notes after the market close on Monday with a coupon of 0%, a reoffer price of 98.25 and an initial conversion premium of 20%.

Pricing came in line with talk for a fixed coupon of 0%, a fixed initial conversion premium of 20% and wider than talk for a reoffer price of 99 to 99.5.

The offering was “a true overnight issue,” a source said, and priced shortly after it was announced.

While it was unclear what assumptions underwriters were using, one source pegged assumptions at 225 bps over Libor and a 25% vol., based on the utility company’s outstanding issues.

Using those assumptions, the fair value of the deal looked to be 97.75, a source said.

The new 0% notes were in focus early in Tuesday’s session. However, they were trading below their reoffer price.

The notes traded as high as 98.375 shortly after the opening bell. However, the majority of trades were on a 97-handle with the notes changing hands between 97.25 and 97.75.

NextEra Energy Partners’ stock was changing hands at $63.92, an increase of 0.71%, shortly before 11 a.m. ET.

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