Rexford on deck; Lucid gains on new Saudi investment; Coinbase, MicroStrategy rally

By Abigail W. Adams

Portland, Me., March 25 – The convertibles primary market returned to action on Monday with one deal launching post-close after a week-long pause in issuance.

Rexford Industrial Realty Inc. plans to price a $1 billion two-tranche offering of exchangeable notes (Baa2/BBB+/BBB+) after the market close on Tuesday, according to a market source.

The offering consists of a $500 million three-year tranche with price talk for a coupon of 3.875% to 4.375% and an initial conversion premium of 30% to 35%.

There is also a $500 million tranche of five-year notes that are talked with a coupon of 3.875% to 4.375% and an initial conversion premium of 30% to 35%.

BofA Securities Inc. is lead left bookrunner for the Rule 144A offering.

Both tranches carry a greenshoe of $75 million.

Meanwhile, the secondary space was relatively active for a Monday with topical news jumpstarting trading activity.

Equity indexes were either side of unchanged with the rate sensitive small cap index outperforming.

The Dow Jones industrial average closed Monday down 162 points, or 0.41%, the S&P 500 index closed down 0.31%, the Nasdaq Composite index closed down 0.27% and the Russell 2000 index closed up 0.10%.

There was $94 million in reported convertibles trading volume about one hour into the session and $500 million on the tape about one hour before the market close.

Lucid Group Inc.’s 1.25% convertible notes due 2026 were in focus after the struggling EV startup received an additional investment from a Saudi Public Investment Fund affiliate.

Coinbase Global Inc.’s recently priced 0.25% convertible notes due 2030 and MicroStrategy Inc.’s convertible notes also saw heavy volume with the notes shooting higher outright with the crypto rally in full force on Monday.

Lucid gains

Lucid Group’s 1.25% convertible notes due 2026 dominated the tape on Monday with the notes making large gains on the heels of the most recent investment from a Saudi Public Investment Fund affiliate.

The 1.25% convertible notes jumped 8 to 9 points outright early in the session before giving back some gains.

The notes were trading at 52.25 early in the session with the yield 27.25% and were seen wrapped around 50.5 in the late afternoon with the yield about 28.625%, according to a market source.

There was $27 million in reported volume.

Lucid’s stock traded to a low of $2.90 and a high of $3.35 before closing at $2.92, an increase of 5.42%.

Lucid’s capital structure was on the rise following news that Saudi investment fund affiliate Ayar Third Investment Co. will purchase an additional $1 billion of convertible preferred stock in a private placement.

Lucid announced early Monday that it had entered into a subscription agreement with Ayar Third Investment for 100,000 shares of $10,000-par three-year series A convertible preferred stock, which carry an annual dividend of 9%, according to an 8K filing with the Securities and Exchange Commission.

The preferred stock is convertible into 278.15 million shares with the initial conversion rate 3.5952.

Crypto rally

Coinbase’s and MicroStrategy’s convertible notes remained in focus with the notes shooting higher on an outright basis as the crypto rally resumed.

Coinbase’s 0.25% convertible notes due 2030 added 4 to 5 points outright with stock up more than 8%.

They were trading at 108.375 versus a stock price of $279.26 in the late afternoon, according to a market source.

There was $22 million in reported volume.

Coinbase’s stock traded to a low of $260.25 and a high of $283.48 before closing at $279.71, up 9.47%.

MicroStrategy’s 0.875% convertible notes due 2031 shot above par to their highest outright level since pricing.

The 0.875% notes were up 10 to 11 points outright with stock up more than 20%.

The notes were trading at 107.25 versus a stock price of $1,859 in the late afternoon, according to a market source.

There was $11 million in reported volume.

They 0% convertible notes due 2027 were up 15 points outright to trade at 144 in the late afternoon.

There was $15 million in reported volume.

The 0.625% convertible notes due 2030 were up 16 points outright to trade at 142.

There was $5 million in reported volume.

MicroStrategy’s stock traded to a low of $1,594 and a high of $1,873 before closing at $1,856, an increase of 21.86%.

Crypto-exposed names were lifted as the Bitcoin rally resumed momentum with the crypto-currency again brushing up against its all-time high after a pull-back the previous week.

Bitcoin was trading at $70,866, an increase of 7.57%, shortly before the close of U.S. equity markets.

Mentioned in this article:

Coinbase Global, Inc. Nasdaq: COIN

Lucid Group Inc. Nasdaq: LCID

MicroStrategy Inc. Nasdaq: MSTR

Rexford Industrial Realty Inc. NYSE: REXR

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