LivePerson on tap; Danaher’s mandatory convertible preferreds eyed; Nio gains outright

By Abigail W. Adams

Portland, Me., Feb. 26 – The convertibles primary market remained active the last week of February with the largest mandatory convertible preferred stock deal of the year set to price after the market close on Tuesday and two more convertible bond deals on deck for Wednesday.

Prospect Capital Corp. plans to price $150 million of six-year convertible notes prior to the market open on Wednesday with price talk for a reoffer price of 98, a coupon of 6.25% to 6.375% to yield 6.76% to 6.89% and an initial conversion premium of 30.5%, according to a 497AD filing with the Securities and Exchange Commission.

Goldman Sachs & Co. LLC, Barclays and RBC Capital Markets LLC are joint bookrunners for the registered offering, which carries a greenshoe of $22.5 million.

LivePerson, Inc. plans to price $150 million of five-year convertible notes after the market close on Wednesday with price talk for a coupon of 0.625% to 1.125% and an initial conversion premium of 30% to 35%, according to a market source.

J.P. Morgan Securities LLC and Barclays are joint bookrunners for the Rule 144A offering, which carries a greenshoe of $22.5 million.

Danaher Corp. plans to price $1.35 billion of par of $1,000 three-year series A mandatory convertible preferred stock after the market close on Tuesday.

The deal looked cheap and was heard to be in demand during bookbuilding.

The deal from Danaher follows last week’s convertible bond deal from Fortive Corp., which was the largest convertible bond deal of the year.

With the greenshoe fully exercised, Fortive priced $1.44 billion of 0.875% convertible notes due 2022.

While new issuance in 2019 still lags 2018 year to date, new deal volume in February 2019 will far exceed new deal volume in February 2018.

Fortive’s 0.875% convertible notes remained major volume movers in the secondary space with the notes improving during Tuesday’s session.

Nio Inc.’s 4.5% convertible notes due 2024 were active in the secondary space and making gains on an outright basis as stock skyrocketed. However, the notes were crumbling dollar-neutral, a market source said.

Danaher eyed

Danaher plans to price $1.35 billion of par of $1,000 three-year series A mandatory convertible preferred stock after the market close on Tuesday with price talk for a dividend of 5.25% to 5.75% and an initial conversion premium of 17.5% to 22.5%, according to a market source.

Using assumptions of 100 basis points over Libor and a 23% vol., the deal modeled 3.75 points cheap at the midpoint of talk, a market source said.

The deal is good quality paper from an investment-grade name, a market source said. The equity holder list is also full of crossover investors.

With Welltower, Inc.’s 6.5% series I cumulative convertible perpetual preferred stock to be converted on Feb. 28, accounts will have plenty of space for the new paper, a market source said.

Demand for the mandatory convertible preferred stock is expected to be strong.

The mandatory convertible preferred stock is pricing concurrently with a $1.35 billion offering of common stock.

The timing of the deal was interesting, one market source noted.

While proceeds from the convertible preferred stock offering will go toward funding Danaher’s high-profile acquisition of GE’s biopharmaceutical division, the acquisition is not expected to close until late December.

Fortive improves

Fortive’s 0.875% convertible notes due 2022 remained major volume movers in the secondary space on Tuesday with the notes improved on a dollar-neutral basis, a market source said.

The 0.875% notes continued to trade around 104.75 with stock wavering between gains and losses.

The notes were improved about 0.25 point dollar-neutral, a market source said.

Fortive stock traded to a high of $82.03 and a low of $81.28 before closing the day at $81.74, an increase of 0.17%.

More than $60 million of the bonds were on the tape by late afternoon.

While trading settled late last week, Fortive’s 0.875% notes have dominated activity in the secondary space since Monday.

The greenshoe on the notes was recently exercised in full, lifting the total size of the deal to $1.44 billion.

Nio active

Nio’s 4.5% convertible notes due 2024 were active with the notes continuing to make gains on an outright basis as stock again jumped on Tuesday.

However, the notes were lagging dollar-neutral, a market source said.

The notes jumped to 109 on Tuesday after closing Monday at 101.

However, with no borrow on the stock, the notes were contracting as stock climbed, a market source said.

When Nio priced the 4.5% convertible notes on Jan. 31, the premium on the notes was 27.5% with stock at $7.46.

The notes were trading with a premium of 8.5% with stock trading around $8.75 on Monday, a market source said. The premium had been reduced to 1.5% on Tuesday.

Nio stock again jumped on Tuesday. Stock traded as high as $10.64 but closed the day at $9.79, an increase of 8.78%.

Stock has been on an upward trajectory since a 60 Minutes segment on the Shanghai-based electric car manufacturer on Sunday.

Stock was also up over 9% on Monday.

Mentioned in this article:

Danaher Corp. NYSE: DHR

Fortive Corp. NYSE: FTV

LivePerson, Inc. Nasdaq: LPSN

Nio Inc. NYSE: NIO

Prospect Capital Corp. Nasdaq: PSEC

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