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Morning Commentary: Livongo, HubSpot convertible offerings eyed; Invacare exchanges
By Abigail W. Adams
Portland, Me., June 1 – Following the highest volume month since 2009, the convertibles primary market launched June with two overnight offerings on deck.
HubSpot Inc. plans to price $400 million of five-year convertible notes and Livongo Health Inc. plans to price $400 million of five-year convertible notes after the market close on Monday.
The deals looked cheap based on underwriters’ assumptions, sources said.
Meanwhile, Invacare Corp. exchanged a portion of its 5% convertible notes due 2021 and 4.5% convertible notes due 2022 for $71.4 million of new 5% series II convertible notes due 2024.
HubSpot on tap
HubSpot plans to price $400 million of five-year convertible notes after the market close on Monday with price talk for a coupon of 0.125% to 0.625% and an initial conversion premium of 30% to 35%.
The deal was heard to be marketed with assumptions of 475 basis points over Libor and a 40% vol., according to a market source.
Using those assumptions, the deal looked 1.625 points cheap at the midpoint of talk, a source said.
The company plans to repurchase or exchange a portion of its 0.25% convertible notes due 2022 in individually negotiated transactions.
Proceeds from the new offering will be used to fund the cash portion of the repurchase or exchange.
The Cambridge, Mass-based software company priced a $400 million issue of the 0.25% notes in May 2018.
The notes broke double par last week and changed hands at 212.8 early Monday, according to Trace data.
Livongo Health eyed
Livongo Health plans to price $400 million of five-year convertible notes after the market close on Monday with price talk for a coupon of 0.75% to 1.25% and an initial conversion premium of 25% to 30%.
The deal was heard to be marketed with assumptions of 600 bps over Libor and a 40% vol., according to a market source.
Using those assumptions, the deal looked 2.625 points cheap at the midpoint of talk, a source said.
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