Morning Commentary: Repay convertibles on tap; Nio, DocuSign notes skyrocket on debut

By Abigail W. Adams

Portland, Me., Jan. 13 – New paper was in focus on Wednesday with $1.9 billion of convertible notes flooding the secondary space and an additional $350 million set to price after the market close.

Repay Holdings Corp. plans to price $350 million of five-year convertible notes after the market close on Wednesday.

The offering looked cheap based on underwriters’ assumptions, sources said.

As market players eyed the new offering in the works, DocuSign Inc.’s and Nio Inc.’s newly priced convertible notes made their aftermarket debut.

The new paper was in demand during bookbuilding and in the secondary space with the notes skyrocketing on debut.

Repay on tap

Repay Holdings plans to price $350 million five-year convertible notes after the market close on Wednesday with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 30% to 35%.

The deal was being marketed with assumptions of 400 basis points over Libor and a 40% vol., according to a market source.

Using those assumptions, the deal looked 2.43 points cheap at the midpoint of talk, a source said.

Nio’s two tranches

Nio priced $1.3 billion of convertible notes in two tranches after the market close on Tuesday.

The company priced a $650 million tranche of five-year notes at par at the rich end of talk with a coupon of 0% and an initial conversion premium of 50%.

Price talk was for a coupon of 0% to 0.5% and an initial conversion premium of 45% to 50%, according to a market source.

The company also priced a $650 million tranche of six-year notes at par at the rich end of talk with a coupon of 0.5% and an initial conversion premium of 50%.

Price talk was for a coupon of 0.5% to 1% and an initial conversion premium of 45% to 50%.

Both tranches expanded upwards of 4 points dollar-neutral.

The company intends to enter into privately negotiated transactions with holders of its 4.5% convertible notes due 2024 to exchange approximately $581.1 million of the notes for American Depositary Shares.

DocuSign trades up

DocuSign priced an upsized $600 million three-year convertible notes after the market close on Tuesday at par with a coupon of 0% and an initial conversion premium of 60%.

Pricing came at the rich end of talk for a coupon of 0% to 0.5% and at the midpoint of talk for an initial conversion premium of 57.5% to 62.5%, according to a market source.

The new paper traded as high as 106.5 out of the gate before settling around 105.25 with stock off.

DocuSign’s stock was changing hands around $258.76, a decrease of 1.48%, shortly before 11 a.m. ET.

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