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Morning Commentary: Square convertibles below par; GFL Environmental accelerates timing
By Abigail W. Adams
Portland, Me., March 3 – New paper was in focus in the convertibles market on Tuesday after two large offerings cleared the primary market.
Square Inc. priced $1 billion of five-year convertible notes prior to the market open on Tuesday at par with a coupon of 0.125% and an initial conversion premium of 50%.
Pricing came at the midpoint of initial price talk for a coupon of 0% to 0.25% and an initial conversion premium of 47.5% to 52.5%, according to a market source.
The new paper dominated activity in the secondary space with more than $81 million in reported volume about one hour into Tuesday’s session.
However, the new 0.125% notes were trading below par with stock off a little over 2%, a market source said.
The notes were trading in a range of 98.875 to 99.5 early in the session. They changed hands at 99.375 shortly before 11 a.m. ET.
Square stock was $78.61, a decrease of 2.66%, shortly before 11 a.m. ET.
GFL Environmental Inc. accelerated the timing of the pricing of its IPO and tangible equity units.
The units were initially slated to price after the market close on Tuesday.
However, GFL priced an upsized $775 million, or 15.5 million units, of $50-par three-year tangible equity units after the market close on Monday with a dividend of 6% and a threshold appreciation premium of 20%.
Pricing came at the midpoint of price talk for a dividend of 5.75% to 6.25% and a threshold appreciation premium of 17.5% to 22.5%, according to a market source.
The greenshoe was also upsized to $116.25 million, or 2.325 million units.
The initial size of the offering was $700 million, or 14 million units, with a greenshoe of $105 million, or 2.1 million units.
The units priced concurrently with GFL’s IPO of 75 million shares, which priced at $19.00 per share, below the targeted range of $20.00 to $21.00.
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