Progress Software on tap; Li Auto, Ionis eyed; Verint Systems, Century Aluminum expands

By Abigail W. Adams

Portland, Me., April 7 – New paper was in focus on Wednesday with one $300 million deal on deck for Thursday, two deals totaling $1.25 billion set to price after the market close and two deals totaling $350 million making their aftermarket debuts.

Progress Software Corp. plans to price $300 million five-year convertible notes after the market close on Thursday 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.

Citigroup Global Markets Inc. and J.P. Morgan Securities LLC are joint bookrunners for the Rule 144A offering, which carries a greenshoe of $45 million.

Ionis Pharmaceuticals Inc. plans to price $500 million in five-year convertible notes and Li Auto Inc. plans to price $750 million in seven-year convertible notes after the market close on Wednesday.

The deals continued to model cheap based on underwriters’ assumptions.

While the deals continued to be marketed with aggressive coupon ranges, conversion premium ranges began to cheapen and there were other concessions in terms of call and put options.

Meanwhile, new paper from Verint Systems Inc. and Century Aluminum Co. made their aftermarket debuts on Wednesday.

Verint’s new convertible notes were flat on an outright basis; however, they expanded dollar-neutral.

While volume in the small issue was light, the notes were outperforming on an outright and dollar-neutral basis.

Outside of the new paper, the secondary space was extremely quiet, sources said.

There was $352 million in reported volume about one hour before the market close.

Nio Inc.’s convertible notes were under pressure as competitor Li Auto prepped its new offering.

Ionis eyed

Ionis Pharmaceuticals plans to price $500 million in five-year convertible notes after the market close on Wednesday with price talk for a fixed coupon of 0% and an initial conversion premium of 30% to 35%, according to a market source.

The deal was being marketed with assumptions of 350 bps over Libor and a 32% vol., according to a market source.

Using those assumptions, the deal looked 2.79 points cheap at the midpoint of talk.

The notes are non-callable, which was a bonus to the offering, a source said.

The offering looked good, sources said.

While sources were not enamored with the 0% coupon, the premium range was much more reasonable, a source said.

Unlike several other convertible issuers that priced deals as stock hit new heights, Ionis stock has been on a downward trajectory since late March, a source said.

Stock has been under pressure since one of the biotech company’s partners, Roche Holding, ended use of one of the drugs in Ionis’ pipeline.

Stock continued to take a hit on Wednesday and closed the day at $43.65, a decrease of 7.62%.

While stock has been on a downward trajectory, the looming maturity of Ionis’ 1% convertible notes due 2021 may have spurred the company to action in the pricing of a new deal.

Ionis plans to repurchase a portion of the 1% convertible notes in privately negotiated transactions with proceeds from the new offering.

Li Auto eyed

Li Auto plans to price $750 million in seven-year convertible notes after the market close on Wednesday with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

The deal was being marketed with assumptions of 750 bps over Libor and a 45% vol., according to a market source.

Using those assumptions, the deal looked 3.38 points cheap at the midpoint of talk, a source said.

The notes are non-callable except for a tax redemption and are putable on May 1, 2024 and May 1, 2026.

The deal looked attractive with the low premium range also a positive, a source said.

However, there may be a borrow problem with the Beijing-based electric vehicle manufacturer’s American Depositary Shares.

Li Auto’s ADSs were “getting whacked,” on Wednesday, a source said, and closed the day at $22.23, a decrease of 12.93%.

Century Aluminum trades up

Century Aluminum priced $75 million of seven-year convertible notes after the market close on Tuesday at par with a coupon of 2.75% and an initial conversion premium of 22.5%, according to a company news release.

Pricing came at the cheap end of talk for a coupon of 2.25% to 2.75% and at the midpoint of talk for an initial conversion premium of 20% to 25%, according to a market source.

While volume in the small issue was light, they were putting in a strong performance on an outright and dollar-neutral basis.

The notes traded as high as 105.75 on an outright basis before coming in to trade at 103.5 in the late afternoon.

They expanded upwards of 2.5 points dollar-neutral.

Century Aluminum stock traded to a high of $15.79 and a low of $14.83 before closing the day at $15.23, a decrease of 0.46%.

Verint Systems prices

Verint Systems priced an upsized $275 million of five-year convertible notes after the market close on Tuesday at par at the midpoint of talk with a coupon of 0.25% and an initial conversion premium of 32.5%, according to a company news release.

Price talk was for a coupon of 0% to 0.5% and an initial conversion premium of 30% to 35%, according to a market source.

The new paper was flat on an outright basis but expanding dollar-neutral.

It was wrapped around par with stock off in the late afternoon.

However, they were seen expanded 0.5 to 1 point dollar-neutral, sources said.

Verint stock traded to a high of $47.52 and a low of $45.88 before closing the day at $46.18, a decrease of 1.43%.

Nio weakens

Nio’s convertible notes were weaker on Wednesday as the Shanghai-based electric car manufacturer’s ADSs continued to get pummeled and rival Li Auto prepped its debut convertible notes offering.

Nio’s 0.5% convertible notes due 2027 were changing hands at 83 on Wednesday. They were contracted about 0.5 point dollar-neutral, a source said.

Nio’s 0% convertible notes due 2026 were trading around 85.

Nio’s ADSs traded to a high of $39.85 and a low of $36.95 before closing the day at $37.27, a decrease of 6.78%.

Nio priced a $650 million tranche of the 0.5% convertible notes and a $650 million tranche of the 0% convertible notes at par in mid-January versus an equity price of $62.04.

Mentioned in this article:

Century Aluminum Co. Nasdaq: CENX

Ionis Pharmaceuticals Inc. Nasdaq: IONS

Li Auto Inc. Nasdaq: LI

Nio Inc. NYSE: NIO

Progress Software Corp. Nasdaq: PRGS

Verint Systems Inc. Nasdaq: VRNT

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