Morning Commentary: Snap convertible notes offering eyed after primary market slowdown

By Abigail W. Adams

Portland, Me., April 27 – The convertibles primary market returned to action after a more than week long hiatus with one large offering on deck.

Snap Inc. plans to price $1 billion of six-year convertible notes after the market close on Tuesday with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 45% to 50%, according to a market source.

The deal was heard to be in the market with assumptions of 225 basis points over Libor and a 42% vol., according to a market source.

Using those assumptions, the deal looked about 2 points cheap at the midpoint of talk.

The camera and social media company is a repeat issuer of convertible notes and plans to enter into privately negotiated exchange agreements with holders of its deep-in-the-money 0.75% convertible notes due 2026 and 0.25% convertible notes due 2025.

The notes were most likely being bought back at a good price to entice participation in the new offering, a source said.

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