Morning Commentary: Mitek Systems convertible offering eyed; secondary quiet at open

By Abigail W. Adams

Portland, Me., Feb. 2 – The convertibles primary market had one deal in the works on Tuesday.

Mitek Systems Inc. plans to price $125 million of five-year convertible notes after the market close on Tuesday with price talk for a coupon of 0.75% to 1.25% and an initial conversion premium of 30% to 35%, according to a market source.

While it was unclear what assumptions underwriters were using for the small offering from the San Diego-based identity verifications solutions company, one sources pegged assumptions at 525 basis points over Libor and a 40% vol.

Using those assumptions, the deal looked 2.41 points cheap at the midpoint of talk, a source said.

Another source pegged assumptions at 550 bps over Libor and a 40% vol., which looked 1.81 points cheap at the midpoint of talk.

While the primary market was quiet outside of Mitek’s new offering, sources expect to see more deals before the end of the week.

Meanwhile, the secondary space saw another quiet start to the day with $74.3 million on the tape about one hour into the session.

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