Altair, Q2 Holdings, New Mountain on tap; JPMorgan Voya-linked notes, Veoneer active

By Abigail W. Adams

Portland, Me., June 4 – Whispers that the convertible primary market’s forward calendar would soon heat up rang true on Tuesday with two new deals on deck and one add-on set to price after the market close.

Q2 Holdings Inc. plans to price $200 million of seven-year convertible notes after the market close on Wednesday with price talk for a coupon of 0.75% to 1.25% and an initial conversion premium of 25% to 30%, according to a market source.

Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC and Stifel, Nicolas & Co. Inc. are bookrunners for the Rule 144A offering, which carries a greenshoe of $30 million.

The notes are pricing concurrently with a $155 million, or 2.15 million share, common stock offering.

Altair Engineering Inc. plans to price $175 million of five-year convertible notes after the market close on Wednesday with price talk for a coupon of 0.125% to 0.375% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

J.P. Morgan Securities LLC, Goldman Sachs & Co. LLC and RBC Capital Markets, LLC are joint bookrunners for the registered offering, which carries a greenshoe of $26.25 million.

New Mountain Finance Corp. plans to price a $50 million add-on to its 5.75% convertible notes due 2023 after the market close on Tuesday in a deal that was most likely the result of a reverse inquiry, sources said.

Meanwhile, the secondary space saw decent trading volume on Tuesday as equity markets rebounded on optimism about a potential rate cut from the Federal Reserve.

JPMorgan Chase Financial Co. LLC’s 0.25% cash-settled equity-linked notes due 2023 tied to Voya Financial, Inc. were the most actively traded issue of the day with the notes breaking par in the high-volume activity.

Veoneer Inc.’s recently priced 4% convertible notes due 2024 were active and posting gains on an outright basis alongside stock although they were largely unchanged dollar-neutral.

The biotech tape was firm on Tuesday with Medicines Co.’s convertible notes posting gains on an outright and dollar-neutral basis.

New Mountain on tap

New Mountain Finance plans to price a $50 million add-on to its 5.75% convertible notes due 2023 after the market close on Tuesday with a reoffer price of 100.25 to 100.75, according to a 497AD filing with the Securities and Exchange Commission.

Initial talk was for a reoffer price of 100.75 to 101.25, according to a market source.

However, with the initial size of the deal $115 million, the add-on will raise the principal amount by almost 50%, warranting a greater discount on the reoffer price, a source said.

The 5.75% convertible notes are a non-liquid issue held by only a few buyers. The notes have not traded since May 20. They were last quoted around 102, a source said.

The add-on was most likely the result of a reverse inquiry with someone looking to increase their position in the name, a source said.

With the volatility in capital markets, real estate investment trusts and business development companies have seen better buyers with investors looking for stable yields, sources said.

JPMorgan active

JPMorgan’s 0.25% cash-settled equity-linked notes due 2023 tied to Voya Financial were the most active issue in the secondary space on Tuesday.

The 0.25% notes had $14 million in reported volume about one hour into the session, which rose to $50 million by the mid-afternoon.

The 0.25% notes were changing hands at 99.375 early in the session and broke par into the afternoon with the notes changing hands around 100.25 in the mid-afternoon, sources said.

There were several $5 million plus trades on the tape, a source said.

Voya Financial stock was on the rise on Tuesday closing the day at $54.15, an increase of 4.8%.

The trading activity may have been the result of portfolio rebalancing, a market source said.

Veoneer active

Veoneer’s 4% convertible notes due 2024 were active and making gains on an outright basis as stock rebounded alongside the broader market.

However, the notes were largely unchanged dollar-neutral, a market source said.

The 4% convertible notes gained about 5.75 points outright.

They were changing hands at 103.75 in the mid-afternoon.

Veoneer stock closed Tuesday at $17.65, an increase of 5.75%.

The notes traded as low as 98 on May 31 as the automotive safety electronics developer and manufacturer’s stock dropped in response to president Donald Trump’s threat to impose tariffs on Mexico.

The threatened tariffs caused the stock of automotive suppliers to crater. While there were signs of an easing of trade tensions on Tuesday, Trump reaffirmed that he would impose a 5% tariff on Mexican goods as early as next week.

Members of congress, including GOP lawmakers, have vocally opposed the new tariffs.

Medicines gains

Medicines’ convertible notes were on the rise on Tuesday with the notes posting gains on both an outright and dollar-neutral basis.

Medicines most recently priced 2.75% convertible notes due 2023 rose about 1.25 points outright to change hands just north of 98.125 in the mid-afternoon.

The notes were improved about 0.25 point dollar-neutral, a market source said.

Medicines 2.5% convertible notes due 2022 were up 3 points outright to 120.5 in the mid-afternoon.

The notes were improved about 0.5 point dollar-neutral, a market source said.

The 2.5% notes were active with about $10 million in reported volume during Tuesday’s session.

Medicines stock closed Tuesday at $37.00, an increase of 2.32%.

Mentioned in this article:

Altair Engineering Inc. Nasdaq: ALTR

Medicines Co. Nasdaq: MDCO

New Mountain Finance Corp. NYSE: NMFC

Q2 Holdings Inc. NYSE: QTWO

Veoneer Inc. NYSE: VNE

Voya Financial, Inc. NYSE: VOYA

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