Morning Commentary: EQT, Snap convertible notes expand on debut in early trading

By Abigail W. Adams

Portland, Me., April 24 – The convertibles primary market rounded out an active week with two upsized deals pricing after the market close on Thursday.

Snap Inc. priced an upsized $850 million of five-year convertible notes, and EQT Corp. priced an upsized $440 million of six-year convertible notes.

The new paper dominated activity in the secondary space on Friday with both seeing a large dollar-neutral expansion.

Snap expands

Snap priced an upsized $850 million of five-year convertible notes after the market close on Thursday at par with a coupon of 0.25% and an initial conversion premium of 35%.

Pricing came at the rich end of talk for a yield of 0.25% to 0.75% and at the midpoint of talk for an initial conversion premium of 32.5% to 37.5%.

The greenshoe was also upsized to $150 million.

The initial size of the deal was $750 million with a greenshoe of $112.5 million.

Snap’s new 0.25% notes accounted for more than one-third of the $304 million of the reported volume about one hour into the session.

The notes were holding above par even as stock sank early in the session.

The notes were seen changing hands at 100.25 with stock off about 1.5%.

They were up 1.25 points dollar-neutral on bid, a market source said.

The 0.25% notes saw more than $124 million in reported volume early in the session.

While Snap’s 0.25% notes were in focus and expanding on debut, the camera and social media company’s 0.75% notes due 2026 were coming in, a source said.

The 0.75% notes traded down to 99.25 early in the session.

The notes were trading off even with stock unchanged, a source said.

“People are moving out of these,” the source said.

Snap stock traded to a low of $15.58 soon after the opening bell but pared its losses and traded up to $15.88, a decrease of 1.30%, shortly before 11 a.m. ET.

EQT trades up

EQT priced an upsized $440 million of six-year convertible notes after the market close on Thursday at par with a coupon of 1.75% and an initial conversion premium of 20%.

Pricing came at the rich end of talk for a coupon of 1.75% to 2.25% and at the midpoint of talk for an initial conversion premium of 17.5% to 22.5%.

The greenshoe was also upsized to $60 million.

The initial size of the deal was $350 million with a greenshoe of $52.5 million.

The notes were trading up on an outright and dollar-neutral basis, sources said.

The 1.75% notes traded up to 103.125 early in the session.

They were bid up 2.75 points on swap, a source said.

EQT stock traded as high as $13.45 soon after the opening bell but was changing hands at $12.76, an increase of 2.04%, shortly before 11 a.m. ET.

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