Morning Commentary: Ivanhoe, Bandwidth, Oak Street, Invacare convertibles in focus

By Abigail W. Adams

Portland, Me., March 11 – The onslaught of new deal activity in the convertible bond market continued on Thursday with four deals totaling $1.6 billion slated to price after the market close and one $1 billion offering making its aftermarket debut.

Ivanhoe Mines Ltd. plans to price $500 million of five-year convertible notes, Oak Street Health Inc. plans to price $750 million of five-year convertible, Bandwidth Inc. plans to sell $250 million of seven-year convertible notes and Invacare Corp. plans to bring $100 million of five-year convertible notes.

The new paper continued to model cheap based on underwriters’ assumptions.

Meanwhile, BlackLine Inc.’s $1 billion offering made its aftermarket debut. The pricing of the notes was mixed with the coupon coming on the rich end of talk and the conversion premium on the cheap end of talk.

Ivanhoe eyed

Ivanhoe Mines plans to price $500 million of five-year convertible notes after the market close on Thursday with price talk for a coupon of 2.25% to 2.75% and an initial conversion premium of 32.5% to 37.5%, according to a market source.

The deal was heard to be in the market with assumptions of 700 basis points over Libor and a 42% vol.

Using those assumptions, the deal looked 5 points cheap at the midpoint of talk.

While the terms were optically attractive and the deal modeled cheap, the underlying equity trades on the Toronto exchange, which was a complicating factor for the offering.

Oak Street eyed

Oak Street Health plans to price $750 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 42.5% to 47.5%, according to a market source.

Underwriters were marketing the deal with assumptions of 300 bps over Libor and a 45% vol.

Using those assumptions, the deal looked 2.88 points cheap at the midpoint of talk, a source said.

Short interest in the name was light at 3.4%.

Bandwidth on tap

Bandwidth plans to price $250 million of seven-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 35% to 40%, according to a market source.

The deal was in the market with assumptions of 375 bps over Libor and a 42% vol., according to a market source.

Using those assumptions, the deal looked 1.9 points cheap at the midpoint of talk.

However, the cloud communications company had a high short interest of 18.95%, a source said.

Invacare seen cheap

Invacare plans to sell $100 million of five-year convertible notes after the market close on Thursday with price talk for a coupon of 3.75% to 4.25% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

The deal was marketed with assumptions of 1,200 bps over Libor and a 45% vol.

Using those assumptions, the deal looked 2.45 points cheap at the midpoint of talk, a source said.

The name also had a high amount of short interest at 12.44%.

BlackLine prices mixed

BlackLine priced $1 billion of five-year convertible notes after the market close on Wednesday at par with a coupon of 0% and an initial conversion premium of 42.5%.

Pricing came at the rich end of talk for a coupon of 0% to 0.5% and at the cheap end of talk for an initial conversion premium of 42.5% to 47.5%, according to a market source.

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