Colony Capital upsizes, jumps in trade; Norwegian Cruise Line upsizes, expands 0.75 point

By Rebecca Melvin

New York, July 17 – The new Colony Capital Inc. 5.75% exchangeable moved higher in active trade early Friday after the real estate investment trust priced an upsized $260 million of the five-year notes.

The new paper expanded more than four points and was last seen at 105 bid, according to a New York-based source.

Colony was the smaller of two deals which priced overnight, but it was the one dominating trade on Friday.

Also new to the market on Friday was Norwegian Cruise Line Holdings Ltd.’s 5.375% exchangeables, which expanded 0.75 point on swap on the day after the Miami-based cruise line priced an upsized $400 million of five-year exchangeable notes at par with a 25% initial exchange premium.

Norwegian Cruise Line’s older 6% exchangeables due 2024 shed a point and traded at 129 in active trade as fundamental holders shifted out of the older notes into the new paper, according to a syndicate source.

The new Norwegian deal was initially talked at $250 million in size. Pricing came at the rich end of talked terms, which were for a coupon of 5.75% to 6.25% and an initial exchange premium of 20% to 25%.

The greenshoe was upsized to $60 million from $37.5 million.

The company also sold a $250 million secondary offering of 13.5 million shares at $15.00 per share and an upsized $750 million of senior secured straight notes due 2026. The straight notes are secured by a first-priority interest in, among other things, one of the company’s vessels.

The new Trip.com Group Ltd. notes that are exchangeable into shares of Huazhu Group Ltd. – which was a $500 million issue that priced on Monday – moved up over the course of week and were seen changing hands on Friday at nearly 109.

The new Trip.com/Huazhu exchangeable priced late Monday with a 1.5% coupon and a 20% premium. They were seen to have traded at 102.5 on Tuesday. The Huazhu shares gained 96 cents, or 2.8% in the early going on Wednesday to $35.38. On Tuesday the stock was up 79 cents, or 2.5% on the day.

The new Atlantica Sustainable Infrastructure Jersey Ltd. five-year green notes were not heard in trade on Tuesday after the company priced $100 million of the senior notes with a 4% coupon and a 20% initial exchange premium. But the issue was seen three points cheap at the midpoint of price talk prior to pricing. They ended up pricing at the cheap end of 3.5% to 4% coupon talk and 20% to 25% exchange premium talk.

Colony jumps higher

The Colony deal priced at a 25% exchange premium as did the Norwegian Cruise Line exchangeable. Colony shares were trading up about a cent or so at $1.86 in late morning trading, and they moved a bit higher into the close to end the session at $1.90, which was up six cents, or 3.3%.

The deal was initially talked at $200 million in size.

The proceeds of the deal will be used to redeem the company’s 3.875% convertible senior notes due 2021 prior to maturity or to repay the 2021 notes at maturity with any remaining proceeds for general corporate purposes.

The real estate investment trust is based in Los Angeles.

Norwegian Cruise Line adds

Norwegian Cruise Line’s newly priced 5.375% exchangeables were quoted 102.125 bid, 102.625 offered versus a $15.33 underlying share price, according to a syndicate source.

The paper moved up 0.75 point on a delta of 80%.

“There were new investors coming into the name, and some people flipping out of the old ones,” the syndicate source said. Parity for the old bonds was 111 on Friday.

Six bookrunners on the deal included J.P. Morgan, Citigroup, Goldman Sachs, Barclays, Mizuho and UBS.

When the company launched the notes early Thursday, the new paper was seen worth 107.76 at the midpoint of price talk, using a credit spread of 1,700 basis points over Libor and a 45% vol.

The proceeds from the issue will be used together with the straight bond proceeds to repay a $675 million senior secured revolving credit facility and to pay any related transaction fees and expenses, with the remainder of proceeds earmarked for general corporate purposes.

The exchangeables are non-callable, with no puts. There is standard takeover and dividend protection.

Mentioned in this article:

American Airlines Group Inc. Nasdaq: AAL

Colony Capital Inc. NYSE: CLNY

NextEra Energy Inc. NYSE: NEE

Norwegian Cruise Line Holdings Ltd. Nasdaq: NCLH

Sosei Group Corp. Toyko: 4565

Southwest Airlines Co. NYSE: LUV

Zscaler Inc. Nasdaq: ZS

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