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Morning Commentary: Uber, MicroStrategy convertibles hit aftermarket, expand on debut
By Abigail W. Adams
Portland, Me., Dec. 9 – New convertible notes were in focus in the secondary space with $1.55 billion of new paper flooding the aftermarket after two deals priced after Tuesday’s close.
Uber Technologies Inc. priced a $1 billion offering of five-year convertible notes and MicroStrategy Inc. priced an upsized $550 million of five-year convertible notes.
The deals were in demand during bookbuilding with the demand following them into the secondary space.
Both notes saw large dollar-neutral expansion on debut.
Uber expands
Uber priced $1 billion of five-year convertible notes after the market close on Tuesday at par with a coupon of 0% and an initial conversion premium of 52.5%.
Pricing came in line with tightened talk for a fixed coupon of 0% and at the rich end of tightened talk for a conversion premium of 50% to 52.5%, according to a market source.
Initial price talk was for a coupon of 0% to 0.25% and an initial conversion premium of 42.5% to 47.5%.
The notes were in demand in the aftermarket with the notes seeing a large dollar-neutral expansion.
The notes were up 3 points dollar-neutral, a source said.
Uber’s stock was changing hands at $53.90, an increase of $53.86, shortly before 11 a.m. ET.
MicroStrategy upsizes
MicroStrategy priced an upsized $550 million of five-year convertible notes after the market close on Tuesday at par at the rich end of talk with a coupon of 0.75% and an initial conversion premium of 37.5%, according to a company news release.
Price talk was for a coupon of 0.75% to 1.25% and an initial conversion premium of 32.5% to 37.5%, according to a market source.
The greenshoe was also upsized to $100 million.
The notes also skyrocketed in the aftermarket.
They gained 3.25 points dollar-neutral, a source said.
MicroStrategy’s stock was trading at $281.74, a decrease of 2.59%, shortly before 11 a.m. ET.
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