Morning Commentary: SmileDirectClub, MakeMyTrip, Pebblebrook hit aftermarket

By Abigail W. Adams

Portland, Me., Feb. 5 – New convertible paper was in focus on Friday with three deals totaling $1.07 billion hitting the secondary space.

SmileDirectClub Inc. priced an upsized $650 million of five-year convertible notes, MakeMyTrip Ltd. priced an upsized $200 million offering of seven-year convertible notes, and Pebblebrook Hotel Trust sold an upsized $215 million add-on to its 1.75% convertible notes due Dec. 15, 2026 after the market close on Thursday.

The offerings were met with massive demand during bookbuilding with all upsizing and pricing through initial talk.

The demand followed the paper into the secondary space where SmileDirectClub and MakeMyTrip saw large dollar-neutral expansions in active trading.

Smile in demand

SmileDirectClub sold an upsized $650 million of five-year convertible notes after the market close on Thursday at par with a coupon of 0% and an initial conversion premium of 40%.

Pricing came in line with tightened talk for a fixed coupon of 0% and at the rich end of talk for an initial conversion premium of 35% to 40%, according to a market source.

Initial price talk was for a coupon of 0% to 0.5% and an initial conversion premium of 30% to 35%, according to a market source.

The deal nearly doubled in size with the initial size of the offering $350 million.

The new paper was changing hands at 102.75 early in the session.

The notes expanded about 2 points dollar-neutral, a source said.

SmileDirectClub’s stock traded to a high of $13.14 and a low of $12.55 before closing the day at $12.83, a decrease of 0.39%.

MakeMyTrip expands

MakeMyTrip priced an upsized $200 million offering of seven-year convertible notes after the market close on Thursday at par with a coupon of 0% and an initial conversion premium of 37.5%, according to a market source.

Pricing came in line with tightened talk for a fixed coupon of 0% and at the rich end of tightened talk for an initial conversion premium of 35% to 37.5%, according to a market source.

Initial talk was for a coupon of 0% to 0.5% and an initial conversion premium of 30% to 35%.

The initial size of the offering was $175 million.

The new paper traded as high as 106 as stock spiked early in the session.

It expanded about 3 points dollar-neutral, a source said.

MakeMyTrip’s stock traded to a high of $30.01 early in the session and was changing hands at $28.24, an increase of 0.2%, shortly before 11 a.m. ET.

Pebblebrook sells add-on

Pebblebrook priced an upsized $215 million add-on to its 1.75% convertible notes due Dec. 15, 2026 after the market close on Thursday with a reoffer price of 105.5.

Pricing came richer than initial talk for a reoffer price of 104.5 to 105, according to a market source.

The initial size of the offering was $175 million.

Pebblebrook’s 1.75% notes were not active early in the session.

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