Assertio convertibles to price overnight; Royal Caribbean comes in; Lyft pressured

By Abigail W. Adams

Portland, Me., Aug. 22 – The convertibles primary market took several market watchers by surprise and launched a small overnight offering.

Assertio Holdings Inc. plans to price $60 million of five-year convertible notes after the market close on Monday with price talk for a coupon of 5.5% to 6.5% and an initial conversion premium of 12.5% to 17.5%, according to a market source.

SVB Securities is bookrunner for the Rule 144A offering, which carries a greenshoe of $10 million.

The deal comes at the height of the summer doldrums with expectations for primary market activity low for the duration of the week.

While the primary market launched a surprise offering, the doldrums were in full effect in the secondary space with trading volume thin.

“Feels like the last two weeks of August,” a source said.

While trading activity was light, the secondary space was weaker on Monday as selling pressure resumed in equity markets.

Indexes were again deep in the red as the market reassessed its expectations for the Federal Reserve’s rate hike schedule.

The Dow Jones industrial average closed down 643 points, or 1.91%, the S&P 500 index closed down 2.14%, the Nasdaq Composite index closed down 2.55% and the Russell 2000 index closed down 2.13%.

There was $26 million in reported volume about one hour into the session and $230 million on the tape about one hour before the market close.

Lyft Inc.’s 1.5% convertible notes due 2025 were under pressure in active trading with stock down alongside the broader market.

The recent downturn in equities was also pressuring some recent deals.

Royal Caribbean Group’s 6% convertible notes due 2025 gave back some of the large gains made since pricing in early August.

Sunnova Energy International Inc.’s 2.625% convertible notes due 2028 fell further below par in active trading although the notes remained unchanged dollar-neutral.

Lyft under pressure

Lyft’s 1.5% convertible notes due 2025 were under pressure in active trading on Monday as stock dropped alongside broader markets.

The 1.5% convertible notes fell 4.375 points outright with stock off about 7%.

The notes were changing hands at 88.375 versus a stock price of $15.52 in the late afternoon, according to a market source.

The yield on the notes was 6.2%.

There was $11 million in reported volume.

Lyft’s stock traded to a low of $15.18 and a high of $16.43 before closing the day at $15.52, a decrease of 6.79%.

The 1.5% convertible notes had been on a strong uptrend with strong earnings and the late July/early Aug. market rally propelling the notes from their all-time low of 84 to a 94-handle, which has been their level for the past two weeks.

However, the notes started to come in amid the selling pressure last Friday with the notes closing the previous week on a 92-handle.

Royal Caribbean comes in

Royal Caribbean’s 6% convertible notes due 2028 gave back some of the strong gains made since the $1.15 billion issue hit the secondary space in early August.

The 6% notes fell 2.5 points outright with stock off more than 4%.

The notes were changing hands at 107.375 versus a stock price of $37.85 in early trade.

They were wrapped around 107 in the late afternoon.

There was $10 million on the tape.

Royal Caribbean’s stock traded to a low of $37.72 and a high of $38.44 before closing the day at $37.78, a decrease of 4.82%.

The notes have been under pressure over the past few sessions as selling pressure returned to equities.

The notes traded as high as 116 on an outright basis last Monday but have trended downward since.

Sunnova below par

Sunnova’s recently priced 2.625% convertible notes due 2028 fell further below par on Monday as stock continued its downward trend.

The 2.625% convertible notes were down 1.125 points outright with stock off about 4%.

The notes were seen at 97.25 versus a stock price of $24.48 in the late afternoon, according to a market source.

While down outright, the notes were largely moving in line dollar-neutral.

There was $8 million in reported volume.

Sunnova’s stock traded to a low of $23.80 and a high of $24.76 before closing the day at $24.16, a decrease of 3.9%.

Sunnova’s 2.625% convertible notes have held up well outright and made gains dollar-neutral with stock on a downward spiral since the $600 million issue priced at par on Aug. 16.

However, the notes dropped to a 98-handle amid the selling pressure last Friday.

While the notes have given back some of the dollar-neutral gains made since hitting the secondary space, they remain expanded from the pricing date.

Mentioned in this article:

Assertio Holdings Inc. Nasdaq: ASRT

Lyft Inc. Nasdaq: LYFT

Royal Caribbean Group NYSE: RCL

Sunnova Energy International Inc. NYSE: NOVA

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