i3 Verticals, Barclays synthetic eyed; Revance notes expand; Collegium adds to gains

By Abigail W. Adams

Portland, Me., Feb. 12 – New convertibles paper was in focus on Wednesday with one new deal pricing and two more on deck for after the market close.

i3 Verticals LLC plans to price $100 million five-year exchangeable notes and Barclays Bank plc plans to price $250 million cash-settled equity linked notes tied to Visa Inc. after the market close on Wednesday.

While i3 Verticals’ new offering looked cheap, the latest synthetic offering modeled rich, sources said. However, it was driven to the market by reverse inquiry.

Revance Therapeutics Inc. priced an upsized $250 million of seven-year convertible notes after the market close on Wednesday.

The new paper dominated activity in the secondary space and saw a large dollar-neutral expansion.

Collegium Pharmaceutical, Inc.’s 2.625% convertible notes due 2026 continued to add to their gains on both an outright and dollar-neutral basis.

Outside of new paper, CyberArk Software Ltd.’s 0% convertible notes due 2024 dropped outright but gained dollar-neutral following its fourth-quarter earnings report.

i3 looks cheap

i3 Verticals plans to price $100 million five-year exchangeable notes after the market close on Wednesday with price talk for a coupon of 0.75% to 1.25% and an initial exchange premium of 27.5% to 32.5%, according to a market source.

The notes are exchangeable for i3 Verticals Inc. common shares.

The deal was heard to be marketed with assumptions of 450 basis points over Libor and a 40% vol.

Using those assumptions, the deal modeled about 3.14 points cheap at the midpoint of talk, a market source said.

Another source pegged the notes about 3 points cheap.

The borrow on the stock is good, sources said.

However, several sources questioned the 450 bps credit spread, which seemed tight given the market cap of the technology and payment processing company, which is under $1 billion.

Barclays synthetic

In another synthetic offering, Barclays Bank plans to sell $250 million cash-settled equity linked notes tied to Visa after the market close on Wednesday with price talk for a coupon of 0%, an initial conversion premium of 20% and a reoffer price of 104 to 104.5, according to a market source.

The deal was marketed with assumptions of 55 bps over Libor and a 23% vol., a market source said.

Using those assumptions, the fair value of the deal modeled out to just north of 103, a market source said.

The deal looked rich based on the reoffer price. However, Visa is a great name, a source said.

And the deal was driven to the market by reverse inquiry from a European account, a source said.

The synthetic offering is the latest in a slew that have priced since January.

The deals have largely been marketed to European accounts in need of investment-grade paper due to their mandates, sources said.

Revance expands

Revance priced an upsized $250 million of seven-year convertible notes after the market close on Tuesday at the rich end of talk with a coupon of 1.75% and an initial conversion premium of 32.5%.

Price talk had been for a coupon of 1.75% to 2.25% and an initial conversion premium of 27.5% to 32.5%.

The greenshoe was also upsized to $37.5 million. The initial size of the deal was $200 million with a greenshoe of $30 million.

The new paper dominated activity in the secondary space and saw a large dollar-neutral expansion.

The 1.75% notes traded as high as 103.5 during Wednesday’s session and were changing hands at 102.5 versus a stock price of $24.00 in the late afternoon.

The notes expanded about 3.5 points dollar-neutral, a market source said.

Revance stock traded to a low of $23.97 and a high of $24.41 before closing the day at $24.20, a decrease of 0.98%.

The notes accounted for the lion’s share of the $639 million in reported volume by the late afternoon.

The notes saw more than $107 million in reported volume heading into the market close.

Collegium adds to gains

Collegium’s 2.625% convertible notes due 2026 continued to gain on an outright and dollar-neutral basis their second day in the secondary space.

The notes were up 5.5 points outright to 110.5 in the late afternoon, a market source said.

They were expanded another 0.75 point dollar-neutral.

Collegium’s stock traded to a low of $22.76 and a high of $24.30 before closing the day at $24.16, an increase of 8.78%.

The notes skyrocketed on their market debut on Tuesday, closing out the day at 105.

The notes were expanded 3.875 to 4 points dollar-neutral, sources said.

CyberArk’s earnings

CyberArk’s 0% convertible notes due 2024 saw heavy trading volume with the notes dropping outright but gaining dollar-neutral as stock sank following its fourth-quarter earnings report.

The 0% convertible notes dropped almost 8 points outright.

They were changing hand at 105 late Wednesday afternoon with stock down more than 14%.

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

CyberArk stock traded to a low of $116.58 and a high of $124.00 before closing the day at $119.38, a decrease of 13.87%.

The information security company’s stock tanked despite an earnings beat on both the top and bottom lines.

CyberArk reported fourth-quarter earnings per share of 97 cents versus analyst expectations for earnings of 81 cents.

Revenue was $129.7 million versus analyst expectations for revenue of $126.4 million.

However, stock was selling off based on weak forward guidance.

CyberArk projected earnings per share of 35 cents to 41 cents for the first quarter versus analyst expectations for earnings per share of 55 cents, Investor’s Business Daily reported.

Mentioned in this article:

Collegium Pharmaceutical, Inc. Nasdaq: COLL

CyberArk Software Ltd. Nasdaq: CYBR

i3 Verticals Inc. Nasdaq: IIIV

Revance Therapeutics Inc. Nasdaq: RVNC

Visa Inc. NYSE: V

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