Morning Commentary: i3 Verticals exchangeables expand on debut; Barclays downsizes

By Abigail W. Adams

Portland, Me., Feb. 13 – While more new paper entered the convertibles secondary space on Thursday, the deals were slow to trade early in the session.

i3 Verticals LLC priced an upsized $120 million of five-year exchangeable notes after the market close on Wednesday at the midpoint of talk with a coupon of 1% and an initial conversion premium of 30%.

Price talk was for a coupon of 0.75% to 1.25% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

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

While the new paper was not active with only $3 million on the tape about one hour into Thursday’s session, the 1% notes saw a large expansion – a theme for the deals that priced over the past week.

i3 Verticals 1% exchangeagle notes were seen at 102.5 bid, 103.5 offered with stock flat early Thursday, a market source said. The notes were changing hands at 103 in the light volume.

While the notes were not active early Thursday, Barclays Bank plc priced a downsized $50 million of cash-settled equity linked notes tied to Visa Inc. after the market close on Wednesday with a coupon of 0%, an initial conversion premium of 20% and a reoffer price of 104, according to a market source and a 424B5 filing with the Securities and Exchange Commission.

Pricing came in line with talk for a coupon of 0%, an initial conversion premium of 20% and at the cheap end of talk for a reoffer price of 104 to 104.5, according to a market source.

The initial size of the deal was $250 million with the option to upsize by $50 million.

The deal was heard to be driven to the market by reverse inquiry from a European account.

However, some sources questioned why banks were still attempting to market synthetics given investor’s lukewarm reception to them.

Barclays’ latest synthetic is the fourth cash-settled equity-linked note to price since January.

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