Morning Commentary: Accolade convertibles eyed; MP Materials expands; ViacomCBS plunges

By Abigail W. Adams

Portland, Me., March 24 – While the new deal frenzy in the convertibles market calmed on Wednesday after the multi-billion-dollar influx of deals the previous session, the new supply continued at a steady pace.

One $250 million offering is on deck for after the market close and $1.6 billion in two deals made their aftermarket debut on Wednesday.

Accolade Inc. plans to sell $250 million of five-year convertible notes after the market close.

MP Materials Corp. priced an upsized $600 million of five-year green convertible notes and ViacomCBS Inc. priced $1 billion of $100-par three-year series A mandatory convertible preferred stock.

The deals priced at the cheap and toward the cheap end of talk.

Their performance in the secondary space was mixed with MP Materials flat outright but expanding dollar-neutral and Viacom’s mandatories plunging on their debut.

Accolade on tap

Accolade plans to sell $250 million of five-year convertible notes after the market close on Wednesday with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 30% to 35%.

The deal was heard to be marketed with assumptions of 450 basis points over Libor and a 42% vol., according to a market source.

Using those assumptions, the deal looked 1.29 points cheap at the midpoint of talk.

MP Materials active

MP Materials priced an upsized $600 million of five-year green convertible notes after the market close on Tuesday at par with a coupon of 0.25% and an initial conversion premium of 26.5%, according to a company news release.

Pricing came at the cheap end of talk for a coupon of 0% to 0.25% and toward the cheap end of talk for an initial conversion premium of 25% to 30%, according to a market source.

Concurrently, certain shareholders sold 6 million shares of common stock at a public offering price of $35.00 per share.

The new paper was flat on an outright basis but was expanding dollar-neutral as stock continued its descent early in the session.

The notes were wrapped around par with stock off more than 6% in early trading.

The notes expanded upwards of 3 points dollar-neutral based off of Tuesday’s close.

MP Materials’ stock was changing hands at $34.59, a decrease of 6.21%, shortly before 11 a.m. ET.

ViacomCBS sinks

ViacomCBS priced $1 billion of $100-par three-year series A mandatory convertible preferred stock after the market close on Tuesday at par with a dividend of 5.75% and a threshold appreciation premium of 17.5%, according to an FWP filing with the Securities and Exchange Commission.

Pricing came at the cheap end of talk for a dividend of 5.25% to 5.75% and a threshold appreciation premium of 17.5% to 22.5%.

Concurrently, the company priced a secondary offering of 20 million shares of its class B common stock at a public offering price of $85.00.

While trading of the mandatories was light, they plunged on debut.

The mandatory preferred stock opened the day at $96 and traded as low as $91 early in the session.

ViacomCBS’ common stock was changing hands at $76.46, a decrease of 16.21%, shortly before 11 a.m. ET.

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