Ivanhoe, Bandwidth, Oak Street, Invacare convertible notes eyed; BlackLine trades up

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, although sources favored some deals over others.

Meanwhile, BlackLine Inc.’s $1 billion offering made its aftermarket debut on another strong day for equities with the Nasdaq composite closing the day up 2.52% and the S&P 500 and Dow Jones industrial average setting fresh records.

The notes were strong out of the gate but came in as the session progressed although they maintained a healthy dollar-neutral expansion.

Ivanhoe ahead

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%.

While the short interest was low, the majority of shares are held by venture capitalists, which may complicate the borrow, a source said.

However, the large offering from the network of primary care facilities geared toward adults on Medicare was a welcome addition to the convertibles universe.

“It’s a different sector than what we’re used to,” a source said.

Bandwidth on tap

Bandwidth plans to sell $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.

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

However, sources did not think it would affect the borrow.

Invacare seen cheap

Invacare intends 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%.

While the deal modeled cheap, the company was highly speculative with a troubled balance sheet, a source said.

Invacare’s outstanding 4.125% convertible notes due 2027 and 5% series II convertible senior exchange notes due 2024 also looked cheaper in the secondary than the new offering, the source said.

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.

The notes were strong out of the gate and traded to a high of 103.

However, they came in as the session progressed and were marked at 100.625 heading into the market close.

The notes expanded about 0.5 point dollar-neutral, a source said.

BlackLine’s stock traded to a high of $118.52 and a low of $113.76 before closing the day at $115.09, an increase of 0.66%.

Mentioned in this article:

Bandwidth Inc. Nasdaq: BAND

BlackLine Inc. Nasdaq: BL

Invacare Corp. NYSE: IVC

Ivanhoe Mines Ltd. TSX: IVN

Oak Street Health Inc. NYSE: OSH

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