Rexford Industrial Realty, Cardlytics convertible notes eyed; Seagate gains on upgrade

By Abigail W. Adams

Portland, Me., March 26 – The convertibles primary market returned to action with two new offerings slated to price after the market close on Tuesday.

Rexford Industrial Realty Inc. is on deck with a $1 billion two-tranche offering of exchangeable notes (Baa2/BBB+/BBB+) and Cardlytics Inc. plans to price $150 million of five-year convertible notes.

There was little doubt the deals would get done with Rexford a solid credit and Cardlytics coming as a refinancing.

However, the deals did not generate much enthusiasm with Rexford the latest high-grade name to tap the market and Cardlytics a small offering that is expected to play to a limited audience.

Meanwhile, it was a relatively active day in the secondary space with equity indexes either side of unchanged.

While indexes were in the green for most of the session, they were dragged into negative territory by the close with the Dow Jones industrial average closing Tuesday down 31 points, or 0.08%, the S&P 500 index closing down 0.28%, the Nasdaq Composite index closing down 0.42% and the Russell 2000 index closing down 0.17%.

There was $566 million of convertible bond trading by late afternoon with investment-grade issues once again driving volume.

However, Seagate HDD Cayman’s 3.5% exchangeable notes due 2028 were also a top volume mover with the notes making large outright gains as stock surged following an analyst upgrade.

Rexford on deck

Rexford Industrial Realty 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 exchange 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 exchange premium of 30% to 35%.

The three-year tranche was heard to be in the market with assumptions of 125 basis points over SOFR and a 23% vol.

Using those assumptions, the tranche looked about 1.625 points cheap at the midpoint of talk, a source said.

The five-year tranche was marketed with assumptions of 175 bps over SOFR and a 23% vol.

The tranche looked 1.875 points cheap at the midpoint of talk.

Demand for the deal was solid with the offering oversubscribed.

However, it was not a hot offering, a source said.

Rexford is a high-grade credit and the notes carry a high bond floor and will most likely be added to the indexes.

While sources do not expect explosive gains in the secondary, the deal was heard to be coming on the cheap end of premium talk, which will help its aftermarket performance.

Cardlytics eyed

Cardlytics plans to price $150 million of five-year convertible notes after the market close on Tuesday with price talk for a coupon of 4% to 4.5% and an initial conversion premium of 27.5% to 32.5%.

The deal was heard to be in the market with assumptions of 950 bps over SOFR and a 45% vol.

Using those assumptions, the deal looked about 3.75 points cheap at the midpoint of talk, a source said.

The deal looked good and was heard to be playing to decent demand with the offering coming as a refinancing.

Proceeds will be used to repurchase for a cash a portion of the company’s outstanding 1% convertible notes due 2025.

The deal was pure opportunism with the company pushing through a refinancing after stock hit a new 52-week high on Monday, a source said.

However, stock was taking a hit on the heels of the new offering and closed at $13.60, down 32.84%.

Cardlytics’ stock has more than doubled since the company reported earnings on March 14 with stock still up more than 100% over the past month despite the sell-off early Tuesday.

Seagate on the rise

Seagate’s 3.5% exchangeable notes due 2028 made strong outright gains on Tuesday as stock popped on the heels of an analyst upgrade.

The 3.5% notes gained 7 points outright with stock up as much as 9% in intraday activity.

They were trading at 129.875 versus a stock price of $96.37 in the late afternoon, according to a market source.

There was $15 million in reported volume.

Seagate’s stock traded to a low of $92.76 and a high of $97.95 before closing at $94.72.

Stock popped on Tuesday after a Morgan Stanley analyst upgraded the name to “Overweight” from “Equal weight” and raised the price target to $115 from $73.

Mentioned in this article:

Cardlytics Inc. Nasdaq: CDLX

Rexford Industrial Realty Inc. NYSE: REXR

Seagate Technology Holdings plc Nasdaq: STX

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