Redfin on tap; Royal Caribbean volatile; Nova trades up; Allscripts skyrockets

By Abigail W. Adams

Portland, Me., Oct. 14 – The convertible primary market continued to churn out new deals with one new deal on deck.

Redfin Corp. plans to price $525 million of five-year convertible notes after the market close on Thursday with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 32.5% to 37.5%, according to a market source.

Goldman Sachs & Co. LLC is sole bookrunner for the Rule 144A offering, which carries a greenshoe of $78.75 million.

Proceeds will be used, in part, to repurchase a portion of the company’s 1.75% convertible notes due 2023 in privately negotiated transactions.

Secondary action

Meanwhile, new paper was in focus in the convertible secondary space on Wednesday after the primary market recently priced a cumulative $675 million in two heavily oversubscribed offerings.

Royal Caribbean Cruises Ltd. priced $500 million of three-year convertible notes and Nova Measuring Instruments Ltd. priced an upsized $175 million of five-year convertible notes after the market close on Tuesday.

Both issues were in high demand during bookbuilding and priced through initial talk.

Nova’s new convertible notes skyrocketed on an outright and dollar-neutral basis on their aftermarket debut.

However, Royal Caribbean’s convertibles were volatile and launched the day with gains only to close the day contracted.

While the secondary space saw an increase of trading volume with $561 million on the tape heading into the market close, some still felt that volume was light given the new paper in the space and the movement in equities.

While the new paper accounted for the majority of trading activity, Allscripts Healthcare Solutions Inc.’s 0.875% convertible notes due 2027 also saw high-volume activity with the notes skyrocketing on news of an asset sale.

Splunk Inc.’s convertible notes were also active with the notes down outright as stock traded off following an analyst downgrade.

However, certain tranches were expanding on swap.

Royal Caribbean expands

Royal Caribbean priced $500 million of three-year convertible notes after the market close on Tuesday at par with a coupon of 2.875% and an initial conversion premium of 37.5%.

Pricing came at the rich end of revised price talk for a coupon of 2.875% to 3.375% and through revised talk for an initial conversion premium of 30% to 35%, according to a market source.

Initial price talk was for a coupon of 3.375% to 3.875% and an initial conversion premium of 25% to 30%.

Concurrently with the convertible notes offering, Royal Caribbean priced a secondary offering of 8,333,333 shares at a price of $60 per share.

The 2.875% notes were volatile on their aftermarket debut.

They were changing hands between 100.75 and 101.5 early in the session.

The notes traded as high as 102 and expanded as much as 1 point dollar-neutral in intraday activity, sources said.

However, they came in as the session progressed.

The new 2.875% notes traded back down to par heading into the market close.

They were contracted about 0.5 point dollar-neutral in the late afternoon, a source said.

Another source saw them down 0.375 point at the close.

There was a large amount of swap trades on the tape.

Royal Caribbean stock traded to a high of $62.48 and a low of $59.64 before closing the day at $59.91, a decrease of 1.15%.

Nova trades up

Nova priced an upsized $175 million of five-year convertible notes after the market close on Tuesday at par with a coupon of 0% and an initial conversion premium of 27.5%.

Pricing came in line with revised price talk for a fixed coupon of 0% and a fixed initial conversion premium of 27.5%.

Initial talk was for a fixed coupon of 0% and an initial conversion premium of 20% to 25%.

The greenshoe was also upsized to $25 million.

The initial size of the offering was $150 million with a greenshoe of $22.5 million.

While volume was light early in the session, the 0% notes skyrocketed.

They were marked at 103.25 bid, 104 offered with stock off early in the session.

The notes were expanded as much as 3 points dollar-neutral in the late afternoon, a source said.

Another source saw them up 3.375 points dollar-neutral at the close.

Nova stock traded to a high of $59.40 and a low of $56.89 before closing the day largely flat at $58.37, a decrease of 0.24%.

Allscripts moves up to 106.375

Allscripts’ 0.875% convertible notes due 2027 were the major gainers of Wednesday’s session with the notes outperforming on an outright and dollar-neutral basis following an asset sale.

The 0.875% notes were up more than 17 points outright with stock up 30%.

They were changing hands at 106.375 late Wednesday afternoon and expanded as much as 6 points dollar-neutral, a source said.

The notes were previously trading on an 88-handle.

Allscripts stock traded to a high of $11.38 and a low of $10.57 before closing the day at $10.90, an increase of 31.17%.

Stock soared after the healthcare technology company announced that it was selling its CarePort Health business to WellSky Corp. for $1.35 billion.

Splunk’s downgrade

Splunk’s convertible notes were active and trading down on an outright basis as stock dropped following an analyst downgrade.

The 1.125% convertible notes due 2027 dropped 4 points outright with stock off more than 3%.

They traded down to a 111-handle and were seen changing hands at 111.875 in the late afternoon.

While down outright, the notes expanded about 0.25 point on the way down.

Splunk’s 0.5% convertible notes due 2023 were down about 6 points outright to change hands at 149.375.

However, the notes were largely moving inline dollar-neutral, a source said.

Splunk stock traded to a high of $210.40 and a low of $204.59 before closing the day at $209.23, a decrease of 3.06%.

Stock was selling off after UBS downgraded the software company to “Sell” from “Buy” and reduced its price target for stock to $165 from $242.

Mentioned in this article:

Allscripts Healthcare Solutions Inc. Nasdaq: MDRX

Nova Measuring Instruments Ltd. Nasdaq: NVMI

Redfin Corp. Nasdaq: RDFN

Royal Caribbean Cruises Ltd. NYSE: RCL

Splunk Inc. Nasdaq: SPLK

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