Northern Oil and Gas plays to solid demand; Bilibili active; Alnylam hits new low

By Abigail W. Adams

Portland, Me., Oct. 11 – While markets remain fragile ahead of a heavy week of economic data, the convertibles primary market returned to action on Tuesday with one new offering on deck.

Northern Oil and Gas Inc. plans to price $350 million of seven-year convertible notes after the market close on Tuesday.

The deal played to solid demand during bookbuilding with the offering optically attractive and from an underrepresented sector in the convertibles universe, sources said.

The deal comes as volatility continued to whipsaw markets ahead of the latest Consumer Price Index report due Thursday and the big banks launching third-quarter earnings later in the week.

While the primary market activity comes as a surprise given market conditions, companies may be beginning to question why they should wait to raise capital, especially with JPMorgan CEO Jamie Dimon’s recent warning, a source said.

“Things are going to get worse before they get better,” a source said. “If you’re going to raise money, better do it now.”

There were rumblings of other deals in the works with refinancings and exchanges continuing to drive new deal activity.

The bulls and the bears continued to duke out it in equity markets with indexes wavering between large gains and losses before closing the day mixed.

The Dow Jones industrial average closed up 36 points, or 0.12%, the S&P 500 index closed down 0.65%, the Nasdaq Composite index closed down 1.10% and the Russell 2000 index closed up 0.06%.

While there was an uptick of activity in the convertibles secondary space after a sleepy Monday, volume remained light with few names seeing concentrated activity.

There was $70 million in reported volume about one hour into the session and $350 million on the tape about one hour before the market close.

Bilibili Inc.’s 1.25% convertible notes due 2027 were among the most actively traded issues in the secondary space with the notes lower outright on a punishing day for the Shanghai-based video sharing website’s equity.

Alnylam Pharmaceuticals Inc.’s 1% convertible notes due 2027 hit their lowest outright level on Tuesday since pricing as stock continued its downward trend.

Northern Oil and Gas eyed

Northern Oil and Gas plans to price $350 million of seven-year convertible notes after the market close on Tuesday with price talk for a coupon of 3.375% to 3.875% and an initial conversion premium of 25% to 30%.

The deal was heard to be in the market with assumptions of a credit spread of 500 basis points and a 42% vol., according to a market source.

Using those assumptions, the deal looked about 2 points cheap at the midpoint of talk.

The deal looked attractive even with the dividend on the company’s stock, which yields 3.33%, sources said.

The notes carry dividend protection above 30 cents per quarter.

The independent energy company, which invests in non-operating minority working and mineral interests in oil and gas properties, is from an underrepresented sector in the convertibles universe.

The energy sector has been hot in 2022, even with the collapse in crude oil futures over the past few months.

The deal was heard to be playing to solid demand and will most likely price at the midpoint or rich end of talk, a source said.

Bilibili active

Bilibili’s 1.25% convertible notes due 2027 were among the most actively traded issue in the secondary space with the notes lower on a rough day for the company’s equity.

The 1.25% notes were down 1.25 points with equity off more than 7%.

They were changing hands at 90.625 versus an equity price of $13.11 in the late afternoon, a source said.

The yield on the notes was 16.5%.

There was $11 million in reported volume.

Bilibili’s American Depositary Shares traded to a low of $12.60 and a high of $13.32 before closing the day at $12.80, a decrease of 7.25%.

The Shanghai-based video sharing website’s equity was under pressure as tensions again rose between Beijing and the United States after the U.S. placed new restrictions on semiconductor exports to China.

Alnylam’s new low

Alnylam’s 1% convertible notes due 2027 sank further below par on Tuesday as stock continued its downtrend with the notes hitting their lowest outright level since pricing in mid-September.

The 1% notes were down about 2 points outright as stock wavered between gains and losses.

The notes traded as low as 94.75 in intraday activity but were wrapped around 95.5 heading into the close, according to a market source.

There was $8 million in reported volume.

Alynylam’s stock traded to a low of $182.80 and a high of $189.63 before closing the day at $186.68, a decrease of 0.075%.

Mentioned in this article:

Alnylam Pharmaceuticals Inc. Nasdaq: ALNY

Bilibili Inc. Nasdaq: BILI

Northern Oil and Gas Inc. NYSE: NOG

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