AEP on tap; Euronet tightens talk; SSR Mining in demand; Fortive, Atlassian notes active

By Abigail W. Adams

Portland, Me., March 13 – The convertibles primary market continued its steady pace of new deal activity with two new deals totaling $700 million set to price after the market close on Wednesday and another $700 million set to price after the market close Thursday.

While new deal volume has trailed 2018 year to date, 2019 will surpass the previous year by the end of the week if the three new deals price at the size they were launched, according to Prospect News data.

American Electric Power plans to price $700 million of $50-par mandatory equity units after the market close on Thursday with price talk for a coupon of 6.125% to 6.625% and an initial conversion premium of 17.5% to 22.5%, according to a market source.

Barclays, Morgan Stanley & Co. LLC and Wells Fargo Securities LLC are joint bookrunners for the registered offering, which carries a greenshoe of $105 million.

Euronet Worldwide, Inc. plans to price $500 million of 30-year convertible notes and SSR Mining Inc. plans to price $200 million of 20-year convertible notes after the market close on Wednesday.

Both deals looked cheap based on underwriters’ assumptions and were heard to be in demand during bookbuilding with Euronet tightening price talk and SSR Mining trading up in the gray market.

Focus was on the new paper set to price after the market close.

However, Fortive Corp.’s 0.875% convertible notes due 2022 continued to dominate trading in the secondary space with the notes improved on a dollar-neutral basis.

Atlassian Corp.’s 0.625% convertible notes due 2023 were also active as the notes exited the Thomson Reuters convertible index.

Euronet tightens talk

Euronet Worldwide plans to price $500 million of 30-year convertible notes after the market close on Wednesday.

Initial price talk was for a coupon of 1% to 1.5% and an initial conversion premium of 30% to 35%.

However, price talk was heard to have tightened during bookbuilding to a coupon of 0.875% and an initial conversion premium of 37%, sources said.

Euronet Worldwide is an investment-grade company and European outright investment-grade funds were in hot pursuit of the deal, a market source said.

While the notes have a maturity of 30 years, they are essentially seven-year paper due to the investor puts.

The notes are non-callable for 3.5 years, callable subject to a 130% hurdle for 2.5 years and are then freely callable.

They are putable in 2025, 2029, 2034, 2039 and 2044.

The deal is being marketed with a credit spread of 175 basis points over Libor and a 28% vol., according to a market source.

Sources pegged the deal between 0.6 point cheap to 1 point cheap at the midpoint of initial price talk.

The deal is being done as a happy meal, a market source said.

A portion of the proceeds will be used to repurchase $100 million of the company’s common stock, which will help with hedging activity.

Euronet Worldwide will also use proceeds to redeem its outstanding 1.5% convertible notes due 2044.

The 1.5% notes have been callable since April 2018, subject to a 130% hurdle.

The 1.5% notes changed hands at 191.5 on Wednesday. There are $402.5 million of the notes outstanding, according to Trace data.

SSR Mining eyed

SSR Mining plans to price $200 million 20-year convertible notes after the market close on Wednesday with price talk for a coupon of 2% to 2.5% and an initial conversion premium of 32.5% to 37.5%.

The notes are non-callable for four years, callable until year seven subject to a 130% hurdle and then freely callable.

There are investor puts in years seven, 10 and 15 with the notes essentially seven-year paper due to the put.

The deal is being marketed with a credit spread of 450 bps over Libor and a 36% vol., according to a market source.

The deal looked to be about 1.5 points cheap at the midpoint of talk, a source said. Another source pegged the deal 1.7 points cheap.

The Rule 144A and Regulation S deal was also heard to be in demand during bookbuilding. The notes were up about 1 point in the gray market, a source said.

Proceeds will be used to purchase a portion of the company’s 2.875% convertible notes due 2033.

Fortive dominates

Fortive’s 0.875% convertible notes due 2022 once again dominated activity in the secondary space with more than $58 million of the bonds on the tape by the late afternoon.

The notes were seen changing hands at 104.75 in the late afternoon. They were improved about 0.125 point to 0.25 point dollar-neutral, a market source said.

Fortive stock closed Wednesday at $83.18, an increase of 1.29%.

Fortive’s convertible notes are also investment-grade, which has driven the high valuation of the notes.

The trading activity may have been the result of accounts making room for new investment-grade convertibles from Euronet, a source said.

Atlassian active

Atlassian’s 0.625% convertible notes due 2023 saw a fresh round of trading activity on Wednesday as the notes were dropped from the Thomson Reuters convertible index.

The notes were changing hands around 144.75 early in the session and rose to 146.5 by the mid-afternoon.

They expanded about 0.25 point dollar-neutral, a market source said.

Atlassian stock closed Wednesday at $108.58, a decrease of 2.13%.

The 0.625% notes were dropped from the index on Wednesday, according to a market source, which prompted the high-volume activity.

Mentioned in this article:

Atlassian Corp. Nasdaq: TEAM

American Electric Power NYSE: AEP

Euronet Worldwide, Inc. Nasdaq: EEFT

Fortive Corp. NYSE: FTV

SSR Mining Inc. Nasdaq: SSRM

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