Greenbrier, Bally’s on tap; NiSource trades up; No-Nos for sale; Li Auto below par

By Abigail W. Adams

Portland, Me., April 14 – The first new paper of the week hit the convertibles secondary space on Wednesday.

NiSource Inc.’s three-year par-of-$100 equity units were performing well on an outright and dollar-neutral basis.

With NiSource priced, two deals remain on the forward calendar – Bally’s Corp.’s $250 million offering of three-year par-of-$50 equity units and Greenbrier Cos., Inc.’s $275 million offering of seven-year convertible notes.

Meanwhile, outside of the equity units, there was an uptick in trading activity in convertible bonds with $145 million on the tape about one hour into the session and $536 million in reported volume about one hour before the market close.

However, the secondary market was weak with sellers outnumbering buyers.

“All of the deals that came since December with 0% coupons are for sale,” a source said. “If the stock is up, holders are selling.”

In general, the No-Nos in the convertibles market, the nickname for 0% coupon bonds that price at par, were contracted 0.25 to 0.5 point dollar-neutral on Wednesday.

The notes were trading extremely cheap based on their valuation at the time of pricing, a source said.

Airbnb Inc.’s 0% convertible notes due 2026 were a case in point with the notes active as stock popped early in the session.

The notes were weaker on a dollar-neutral basis in the high-volume activity, a source said.

Li Auto Inc.’s recently priced 0.25% convertible notes due 2028 dropped below par after an initially strong performance in the secondary space.

Competitor Nio Inc.’s convertible notes were also under pressure during Wednesday’s session.

MicroStrategy Inc.’s 0% convertible notes due 2027 were down on an outright and dollar-neutral basis on Wednesday with stock crushed following the public listing of crypto-exchange Coinbase on the Nasdaq.

The calendar

Two offerings are slated to price after the market close on Thursday.

Greenbrier plans to price $275 million of seven-year convertible notes after the market close on Thursday with price talk for a coupon of 2.375% to 2.875% and an initial conversion premium of 30% to 35%, according to a market source.

BofA Securities Inc. and Goldman Sachs & Co. LLC are bookrunners for the Rule 144A offering, which carries a greenshoe of $41.25 million.

Bally’s plans to price $250 million of three-year par-of-$50 equity units with price talk for a dividend of 6% to 6.5% and a threshold appreciation premium of 17.5% to 22.5%, according to a market source.

NiSource improves

NiSource priced $750 million of three-year par-of-$100 equity units after the market close on Tuesday at the cheap end of talk with a payment of 7.75% and a threshold appreciation premium of 17.5%.

Price talk was for a payment of 7.25% to 7.75% and a threshold appreciation premium of 17.5% to 22.5%, according to a market source.

The units consist of a stock purchase agreement and a 10% interest in one share of par-of-$1,000 series C mandatory convertible preferred stock.

The units were trading up on an outright and dollar-neutral basis.

While the units were changing hands on a 101-handle early in the session, they improved as the session progressed and were marked at 102 bid, 102.5 offered in the late afternoon.

They expanded 0.5 point dollar-neutral, a source said.

NiSource’s stock traded to a high of $25.40 and a low of $24.55 before closing the day at $25.26, an increase of 3.10%.

Airbnb active

Airbnb’s 0% convertible notes due 2026 were active on Wednesday.

The 0% convertible notes were nominally improved outright as stock spiked early in the session.

However, they came in as stock turned negative heading into the afternoon.

The 0% notes were changing hands at 101.875 versus a stock price of $180.65 early in the session, according to a market source.

However, the notes dropped down to 100.5 as stock sold off in the afternoon.

The notes were also coming in on an outright basis, a source said.

Airbnb’s stock traded to a high of $181.47 and a low of $175.31 before closing the day at $176.43, a decrease of 0.85%.

Li Auto below par

After a strong start in the aftermarket, Li Auto’s 0.25% convertible notes due 2028 dropped below par on Wednesday.

The 0.25% notes traded down to 98 amid the general market weakness.

The Beijing-based electric vehicle manufacturer’s American Depositary Shares were down more than 3%.

The shares traded to a high of $22.11 and a low of $20.85 before closing the day at $21.10, a decrease of 3.3%.

Competitor Nio’s convertible bonds were also under pressure on Wednesday.

Nio’s 0.5% convertible notes due 2026 traded down to 81 on Wednesday.

The 0% convertible notes due 2026 traded down to 82.75.

The Shanghai-based electric car manufacturer’s ADSs traded to a high of $39.33 and a low of $36.79 before closing the day at $37.02, a decrease of 3.79%.

MicroStrategy down

After trading up on an outright basis as stock soared the previous session, MicroStrategy’s 0% convertible bonds due 2027 were again under pressure with stock crushed following crypto-exchange Coinbase’s direct listing.

The 0% convertible notes dropped down to 87 on an outright basis after closing out the previous session near 91.

They were contracted 0.5 point dollar-neutral, a source said.

MicroStrategy’s stock traded to a high of $882.10 and a low of $730 before closing the day at $735.50, a decrease of 13.32%.

Stock popped more than 18% as Bitcoin surged in the run-up to Coinbase’s direct listing.

However, stocked tanked on Wednesday despite Bitcoin’s continued upward momentum.

With Coinbase now publicly traded, there were plenty of ways to play Bitcoin, which most likely resulted in the sell-off in MicroStrategy stock, a source said.

Coinbase opened at $381.00, traded to a high of $429.54 and a low of $310, and closed at $328.28, an increase of 31.31%, on its highly anticipated trading debut.

Bitcoin again hit a new all-time high of $64,767.71 in intraday activity but gave back some of the gains and was trading at $62,341 at the close of equity markets.

Mentioned in this article:

Airbnb Inc. Nasdaq: ABNB

Li Auto Inc. Nasdaq: LI

MicroStrategy Inc. Nasdaq: MSTR

Nio Inc. NYSE: NIO

NiSource Inc. NYSE: NI

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