Burlington convertibles price rich; Sabre, Natera eyed; Booking Holdings active

By Abigail W. Adams

Portland, Me., April 13 – The convertibles primary market began the week in high gear with three overnight deals.

Burlington Stores Inc. price $700 million of five-year convertible notes after the market close on Monday.

Natera Inc. plans to price $250 million of seven-year convertible notes and Sabre Corp. plans to sell $250 million of five-year exchangeable notes after the market close.

The offerings looked cheap based on underwriters’ assumptions, sources said.

“They’re starting to price them cheaper to get them out the door,” a source said.

All three deals should do very well with the pricing favorable and the new paper in demand, a source said.

Meanwhile, while market players were eyeing the active pipeline of new deals, it was a quiet day in the secondary space with markets in Europe closed for Easter Monday.

However, new paper remained in focus with Booking Holdings Inc.’s 0.75% convertible notes due 2025 and Health Catalyst Inc.’s 2.5% convertible notes due 2025 continuing to see trading activity.

Burlington looks cheap

Burlington Stores priced $700 million of five-year convertible notes after the market close on Monday at par at the rich end of talk with a coupon of 2.25% and an initial conversion premium of 32.5%.

Price talk was for a coupon of 2.25% to 2.75% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

The deal was being marketed with assumptions of 600 basis points over Libor and a 35% vol., according to a market source.

Using those assumptions, the deal looked almost 5 points cheap at the midpoint of talk.

In addition to the convertible notes, the department store retailer priced $300 million senior secured notes due 2025 at par to yield 6¼%.

The company also announced Monday that it furloughed nearly all of its store and distribution center employees, the CEO will forgo compensation and executive leaders will take up to a 50% pay cut.

Natera eyed

Natera plans to sell $250 million of seven-year convertible notes after the market close on Monday with price talk for a coupon of 2.25% to 2.75% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

The deal was being marketed with assumptions of 800 bps over Libor and a 42% vol., according to a market source.

Using those assumptions, the deal looked 3.6 points cheap at the midpoint of talk, a source said.

The genetic testing company also released preliminary first-quarter results on Monday.

The company expects to report revenue of $89 million to $91 million for the first quarter with 235,000 tests performed.

Quarterly unit growth was the largest in the company’s history, the company said in a press release.

However, guidance was withdrawn due to the uncertain impact of the coronavirus pandemic.

Sabre’s exchangeables

Sabre plans to price $250 million of five-year exchangeable notes after the market close on Monday with price talk for a coupon of 4.5% to 5% and an initial exchange premium of 22.5% to 27.5%, according to a market source.

The notes will be issued by subsidiary Sabre GLBL Inc. and exchangeable for Sabre Corp. common stock.

The deal was being marketed with assumptions of 1,200 bps over Libor and a 42% vol., according to a market source.

Using those assumptions, the deal looked almost 7 points cheap at the midpoint of talk, a source said.

However, despite how wide the credit spread was, some sources felt it could be even wider.

The software and technology company serving the global travel industry isn’t even a business right now, a source said.

The spread could easily be 1,400 bps to 1,600 bps over Libor, which would shave off some of the cheapness of the deal, the source said.

Concurrently with the convertible notes, Sabre priced an upsized $775 million of five-year secured notes at par to yield 9¼%.

The offerings were rescue financing, a source said.

Active issues

It was a quiet day in the secondary space as market players eyed the onslaught of deals set to price after the market close.

Booking Holdings’ newly priced 0.75% convertible notes due 2025 continued to see high volume activity.

The 0.75% notes were changing hands at 109.75 with stock off slightly.

Booking Holdings stock traded to a high of $1,428.01 and a low of $1,368.39 before closing the day at $1,421.01.

Health Catalyst’s newly priced 2.5% convertible notes due 2025 were also active as stock wavered between gains and losses.

The 2.5% notes were changing hands just shy of 106 early in the session.

Stock popped heading into the market close.

Health Catalyst stock traded to a low of $24.47 and a high of $26.60 before closing the day at $26.24, an increase of 4.79%.

Mentioned in this article:

Booking Holdings Inc. Nasdaq: BKNG

Burlington Stores Inc. NYSE: BURL

Health Catalyst Inc. Nasdaq: HCAT

Natera Inc. Nasdaq: NTRA

Sabre Corp. Nasdaq: SABR

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