American Electric, GOL Linhas on tap; Euronet Worldwide skyrockets; SSR Mining expands

By Abigail W. Adams

Portland, Me., March 14 – The convertibles primary market continued its active pace with $700 million in new paper pricing over two deals prior to the market open on Thursday, a $700 million deal set to price after the market close and a $300 million deal joining the forward calendar.

American Electric Power plans to price $700 million of $50-par mandatory equity units after the market close on Thursday. The deal was heard to be in demand during bookbuilding.

GOL Linhas Aereas Inteligentes SA plans to price $300 million of five-year exchangeable notes after the market close on March 25.

The deal looked several points cheap based on underwriter assumptions, sources said.

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

The new paper dominated activity in the secondary space, accounting for more than half of the total trading volume early in the session.

Both notes saw large dollar-neutral expansions.

American Electric on tap

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.

The equity units will consist of a contract to purchase common stock and a 1/20 interest in a $1,000-par junior subordinated debenture due 2024.

The deal was heard to be in demand during bookbuilding, a market source said.

American Electric Power is a large cap, investment-grade company, which is sought after by investors.

GOL Linhas looks cheap

GOL Linhas plans to price $300 million of five-year exchangeable notes after the market close on March 25 with price talk for a coupon of 3.75% to 4.25% and an initial conversion premium of 30% to 40%.

Underwriters are marketing the deal with a credit spread of 575 basis points over Libor and a 40% vol., according to a market source.

Using those assumptions, the deal modeled 8 points cheap at the midpoint of talk. However, the borrow on the American Depositary Shares from the Sao Paulo-based provider of airline services is difficult.

Other sources pegged the credit spread at 550 bps over Libor and a 30% vol. and factored in about a 2% borrow, which brought the fair value of the deal down to just above par.

Using those assumptions, the deal looked 0.125 to 0.25 point cheap, a source said.

The deal will price concurrently with a borrow facility for the company’s ADS.

Controlling shareholders will price up to 14 million ADS in a registered offering, which will be loaned to an initial purchaser of the notes to facilitate the borrow.

The deal will go through an extended roadshow and will remain on the forward calendar until after the market close March 25.

Euronet in demand

Euronet priced $500 million of 30-year convertible notes after the market close on Wednesday at par with a coupon of 0.75% and an initial conversion premium of 36%, according to a company news release.

Pricing came at the rich end of revised price talk for a coupon of 0.75% to 1% and toward the midpoint of talk for an initial conversion premium of 35% to 37.5%.

Talk was tightened during bookbuilding. Initial price talk was for a coupon of 1% to 1.5% and an initial conversion premium of 30% to 35%, sources said.

The deal was in demand during bookbuilding and was multiple times oversubscribed, sources said.

The notes are index eligible and investment grade, and Euronet is a repeat issuer of convertible notes with a good track record.

“They have a lot of the key elements people are looking for,” a market source said.

There was some pushback from accounts regarding a premium in excess of 36%, so the deal priced at 36%, enabling the company to capture a little more premium while still maintaining the book, a source said.

While there was a healthy mix of outright and hedge accounts, the majority of the allocation went to outright accounts, a market source said.

The demand for the notes followed them into the secondary space.

The notes traded up to 103 out of the gate and were seen changing hands just north of 104 about one hour into Thursday’s session.

The notes were expanded 3 points dollar-neutral by the late afternoon, sources said.

“They’re investment grade,” a market source said. “That’s why they’re trading so high.”

More than $384 million of the notes had traded by the late afternoon.

Euronet stock closed Thursday at $140.47, an increase of 1.23%.

Euronet’s 1.5% convertible notes due 2044 were also active with more than $60 million of the bonds changing hands during Thursday’s session.

The notes were trading between 194.5 to 195.

Approximately $94.5 million of the proceeds from the new offering will be used to repurchase $49 million of the 1.5% notes.

The activity surrounding the 1.5% notes may have been part of the exchange or holders switching from the old notes to the new ones, a market source said.

Euronet plans to call the remaining outstanding notes following the closing of the new offering.

SSR expands

SSR Mining priced $200 million of 20-year convertible notes after the market close on Wednesday at par with a coupon of 2.5% and an initial conversion premium of 35%.

Pricing came at the cheap end of price talk for a coupon of 2% to 2.5% and at the midpoint of talk for an initial conversion premium of 32.5% to 37.5%.

The notes were trading in a wide range on an outright basis early in Thursday’s session. Pre-opening the notes were 100.25 to 102, a market source said.

However, the notes traded to a low of 99.75 soon after the opening bell but quickly popped back above par.

They were changing hands around 100.25 about one hour into Thursday’s session. They were trading between 100.375 and 100.75 later in the afternoon.

The notes were expanded 2 points dollar-neutral, a market source said.

SSR Mining stock closed Thursday at $13.00, a decrease of 5.04%.

Mentioned in this article:

American Electric Power NYSE: AEP

Euronet Worldwide Inc. Nasdaq: EEFT

GOL Linhas Aereas Inteligentes SA NYSE: GOL

SSR Mining Inc. Nasdaq: SSRM

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