Morning Commentary: Assurant mandatory convertibles hit market; two deals to price after the close

By Abigail W. Adams

Portland, Me., March 8 – Assurant Inc.’s newly priced 6.5% series D mandatory convertible preferred stock were trading up on their market debut on Thursday.

The convertible preferreds were seen trading just above par at 100.15 early in Thursday’s session with the company’s stock down about 0.3%.

Assurant priced $250 million of $100-par series D mandatory convertible preferred stock prior to the market open Thursday with a dividend of 6.5% and an initial conversion premium of 20%.

Pricing came at the midpoint of talk for a dividend of 6.25% to 6.75% and an initial conversion premium of 17.5% to 22.5%. The deal looked to be 2.5-points cheap at the midpoint of talk, a market source said.

Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC and Wells Fargo Securities, LLC were the joint bookrunners for the registered deal, which carries a greenshoe of $37.5 million.

The series D mandatory convertible preferred stock freed to trade in the OTC markets Thursday with a temporary ticker of “AIZZP.” The convertible preferreds will be listed for trade on the New York Stock Exchange under the ticker “AIZP.”

As new paper from Assurant hits the secondary market, two new deals are in the pipeline.

Guidewire Software Inc. plans to price $300 million of seven-year convertible notes after the market close Thursday with price talk for a coupon of 1.25% to 1.75% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

The deal is an interesting one and will probably do well, although the seven years until maturity is a drawback, a market source said.

Deutsche Bank AG, London Branch plans to price $300 million of five-year cash-settled equity-linked notes tied to Voya Financial, Inc. stock after the market close on Thursday with price talk for a coupon of 0.5% to 1% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

This is the second deal of cash-settled equity-linked notes tied to Voya Financial to price in recent months.

On Jan. 31, JPMorgan Chase Financial Co. LLC priced five-year cash-settled convertible notes linked to Voya Financial stock with a coupon of 0.25% and an initial conversion premium of 32.5%.

Pricing came at the middle of talk for a coupon of 0% to 0.5% and at the cheap end of talk for an initial conversion premium of 32.5% to 37.5%.

JPMorgan’s equity-linked notes initially struggled alongside the broader markets and spent the first half of February below par.

The 0.25% notes due 2023 have since regained their footing and were last seen trading on Wednesday at 104.

Voya Financial stock was down to $50.91, a decrease of 1.51%, early in Thursday’s session.

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