Morning Commentary: Alarm.com convertible offering eyed; Repay skyrockets on debut

By Abigail W. Adams

Portland, Me., Jan. 14 – New convertibles paper remained in focus in the secondary space with one deal set to price after the market close and one more making its aftermarket debut.

Alarm.com plans to price $350 million of five-year convertible notes after the market close on Thursday with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 37.5% to 42.5%.

The deal was heard to be in the market with assumptions of 300 basis points over Libor and a 40% vol., according to a market source.

Using those assumptions, the deal looked 2.96 points cheap at the midpoint of talk, sources said.

However, the offering is expected to follow the recent trajectory of deals and price tight.

Meanwhile, Repay Holdings Corp.’s newly priced convertible notes made their aftermarket debut.

Repay priced an upsized $400 million of five-year convertible notes after the market close on Wednesday at par with a 0% coupon and an initial conversion premium of 40%.

Pricing came at the rich end of initial price talk for a coupon of 0% to 0.5% and richer than initial talk for an initial conversion premium of 30% to 35%.

The initial size of the offering was $350 million.

The new paper skyrocketed on debut.

The notes were changing hands at 105 bid, 105.5 offered early in the session, according to a market source.

Repay’s stock traded as high as $26.00 early in the session but came in to trade at $25.06, an increase of 1.37%, shortly before 11 a.m. ET.

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