Morning Commentary: Vail convertible offering eyed; Zynga, TechTarget hit aftermarket

By Abigail W. Adams

Portland, Me., Dec. 15 – New paper was in focus on Tuesday with the convertibles primary market continuing to roll out deals on what is expected to be the last week of the year for an active calendar.

Vail Resorts Inc. will make its debut appearance in the convertibles market with a $500 million offering of five-year convertible notes that is slated to price after the market close.

The deal looked cheap based on underwriters’ assumptions and is the latest serial high-yield issuer to cross over to convertibles.

Meanwhile, new paper from Zynga Inc. and TechTarget Inc. dominated activity in the secondary space with both making gains on an outright and dollar-neutral basis.

Vail in focus

Vail Resorts plans to price $500 million of five-year convertible notes after the market close on Tuesday with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 40% to 45%.

The deal was heard to be marketed with assumptions of 350 basis points over Libor and a 40% vol., a source said.

Using those assumptions, the deal looked about 1 point cheap at the midpoint of talk.

Vail Resorts is a serial issuer of high-yield notes.

However, in contrast to other cross-over issuers from the high-yield market earlier in the year, the offering was opportunistic with the mountain resort operator taking advantage of attractive pricing.

Zynga trades up

Zynga priced an upsized $762 million of six-year convertible notes after the market close on Monday at par at the rich end of tightened talk with a coupon of 0% and an initial conversion premium of 50%.

Price talk tightened to a fixed coupon of 0% and an initial conversion premium of 47.5% to 50%, according to a market source.

Initial price talk was for a coupon of 0% to 0.5% and an initial conversion premium of 42.5% to 47.5%.

The new paper was in focus in the secondary space and trading up on debut.

The notes were trading in a tight range of 101.75 to 102 early in the session.

They expanded 1 point dollar-neutral, a source said.

There was more than $109 million on the tape less than one hour into the session.

Zynga’s stock was changing hands at $8.90, an increase of 2.18%, shortly before 11 a.m. ET.

TechTarget gains

TechTarget priced $175 million of five-year convertible notes after the market close on Monday at par with a coupon of 0.125% and an initial conversion premium of 40%.

Pricing came at the rich end of initial price talk for a coupon of 0.125% to 0.625% and at the rich end of revised talk for an initial conversion premium of 35% to 40%, according to a market source.

Initial talk was for a conversion premium of 30% to 35%.

The notes were also trading up on an outright basis.

The notes traded as high as 102.5. However, the majority of trades were in the 101.25 to 101.75 range.

The notes were up 1.25 points dollar-neutral, a source said.

TechTarget’s stock was changing hands at $51.06, an increase of 1.49%, shortly before 11 a.m. ET.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.