GoPro convertible offering eyed; Liberty exchangeables expand; Pinduoduo up; YY crushed

By Abigail W. Adams

Portland, Me., Nov. 19 – New paper remained in focus in the convertibles space with one offering set to price after the market close and another making its after-market debut.

GoPro Inc. plans to price $100 million of five-year convertible notes after the market close on Thursday.

The deal looked cheap, sources said. However, the small offering from the once struggling company is expected to have a limited audience.

Meanwhile, Liberty Broadband Corp.’s latest exchangeable notes tied to Charter Communications Inc.’s class A common stock made their aftermarket debut on Thursday.

The new paper was trading up on an outright and dollar-neutral basis, a source said.

However, Liberty’s outstanding 2.75% exchangeable notes due 2050 tied to Charter were contracting on the heels of the new offering.

Pinduoduo Inc.’s 0% convertible notes due 2025 remained active in the secondary space with the notes continuing their upward momentum.

Outside of recent issues, JOYY Inc.’s convertible notes saw a minor rebound on Thursday after they were crushed the previous session following a short-seller report.

GoPro in focus

GoPro plans to price $100 million of five-year convertible notes after the market close on Thursday with price talk for a coupon of 1.25% to 1.75% and an initial conversion premium of 30% to 35%.

The notes were heard to be in the market with assumptions of 600 basis points over Libor and a 45% vol., which looked 4.5 points cheap at the midpoint of talk, assuming a decent borrow, a source said.

However, the small issue is expected to have a limited audience.

GoPro is a repeat issuer of convertible notes.

The camera and technology company’s 3.5% convertible notes due 2022 were in busted territory for most of 2019.

However, the notes made a spectacular comeback over the past few months as GoPro’s stock gained traction.

The notes were changing hands at 110.25 on Wednesday, according to Trace data.

GoPro’s stock recently broke out to a new 52-week high following its third-quarter earnings report, which smashed analyst expectations.

The short interest in the stock is 11%, a source said.

Liberty expands

Liberty Broadband priced an upsized $750 million of 30-year exchangeable notes tied to Charter Communications’ class A common stock at par with a coupon of 1.25% and an initial exchange premium of 40%.

Pricing came toward the midpoint of talk for a coupon of 1.125% to 1.625% and at the midpoint of talk for an initial exchange premium of 37.5% to 42.5%, according to a market source.

The greenshoe was also upsized to $75 million.

The initial size of the offering was $650 million with a greenshoe of $65 million.

The new paper was putting in a strong performance in the aftermarket.

The new notes traded up to 101.625 early in the session.

They were changing hands at 101.5 in the late afternoon.

The notes expanded 1 point on a dollar-neutral, or hedged, basis, a source said.

While Liberty’s latest exchangeable notes tied to Charter’s stock expanded on debut, the company’s outstanding 2.75% exchangeable notes due 2050 tied to Charter contracted 2 points, a source said.

Proceeds from Liberty’s latest offering were used to repurchase the majority of GCI Liberty’s 1.75% exchangeable notes due 2046 tied to Charter.

The company paid upwards of 5 points of premium for the 1.75% outstanding notes.

While holders of some of Liberty’s paper made out on the new offering, others lost out.

“People are fatigued with all of the Liberty paper,” a source said.

Charter’s stock traded to a high of $655.73 and a low of $636.69 before closing the day at $650.54, an increase of 1.26%.

Pinduoduo day 2

Pinduoduo’s 0% convertible notes due 2025 continued to perform well their second day in the secondary space.

The notes were changing hands at 105.5 bid, 106 offered versus a stock price of $139 early in the session.

They rose to a 106 handle in the late afternoon.

The 0% notes expanded another 0.375 to 0.5 points dollar-neutral, a source said.

Pinduoduo’s ADSs traded to a high of $139.88 and a low of $132.96 before closing the day at $137.66, an increase of 3.99%.

The notes expanded upwards of 3 points dollar-neutral on their secondary market debut on Wednesday.

JOYY crushed

JOYY’s convertible notes saw a minor rebound on Thursday after they were crushed the previous session following a short-seller report.

JOYY’s 0.75% convertible notes due 2025 traded back above par as JOYY’s ADSs pared their losses from Wednesday.

The 0.75% notes rose to 104 after trading down to 93 in after-hours trading on Wednesday, sources said.

The notes also saw minor improvement dollar-neutral after contracting 5 to 7 points on Wednesday, a source said.

The Guangzhou, China-based social media company’s 1.375% convertible notes also traded back above par with the notes closing Thursday at 102.

However, the 1.375% convertible notes remained contracted up to 10 points dollar-neutral, a source said.

The dollar-price of the notes should be around 115 based on the underlying equity price, a source said.

The 1.375% notes saw a larger contraction than the 0.75% notes due to their longer maturity.

JOYY’s equity rebounded on Thursday and closed the day at $86.11, an increase of 16.9%, after tanking 26% on Wednesday.

JOYY’s equity sold off after short-seller Muddy Waters Research claimed the company was mostly fraudulent and that its paying users were bots operating from its internal network.

The allegations come after Baidu announced it was purchasing YY Live, JOYY’s livestreaming platform in a $3.6 billion deal, The Financial Times reported.

Mentioned in this article:

Charter Communications Inc. Nasdaq: CHTR

GoPro Inc. Nasdaq: GPRO

JOYY Inc. Nasdaq: YY

Pinduoduo Inc. Nasdaq: PDD

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