Morning Commentary: DraftKings, Magnite convertible note offerings on tap to begin week

By Abigail W. Adams

Portland, Me., March 15 – The parade of new convertibles deals continued on Monday with two offerings totaling $1.35 billion slated to price after the market close.

DraftKings Inc. plans to price $1 billion of seven-year convertible notes, and Magnite plans to sell $350 million of five-year convertible notes.

The offerings continued to model cheap based on underwriters’ assumptions.

DraftKings in focus

DraftKings plans to price $1 billion of seven-year convertible notes after the market close on Monday with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 37.5% to 42.5%, according to a market source.

The deal was heard to be in the market with assumptions of 300 basis points over Libor and a 45% vol.

Using those assumptions, the deal looked 2.125 points cheap at the midpoint of talk, a source said.

The short interest in the name is 6.47%.

Magnite notes eyed

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

Underwriters were marketing the deal with assumptions of 350 bps over Libor and a 45% vol.

Using those assumptions, the deal looked 2.8 points cheap at the midpoint of talk, a source said.

The short interest in the name is 8.32%.

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