BigCommerce, BeautyHealth on tap; Radius convertibles offering eyed; Nio, Opendoor up

By Abigail W. Adams

Portland, Me., Sept. 8 – The convertibles primary market returned to action after a more than two-week hiatus with three deals on deck.

BigCommerce Holdings Inc. plans to price $300 million of five-year convertible notes and Beauty Health Co. plans to price $400 million of five-year convertible notes after the market close on Thursday.

Radius Global Infrastructure Inc. plans to price $200 million of five-year convertible notes after the market close on Wednesday.

While Radius’ offering looked cheap based on underwriters’ assumptions and was optically attractive, some sources were not enthusiastic about the offering, which was heard to pricing toward the cheap end of talk.

Meanwhile, there was an uptick of activity in the secondary space on Wednesday as the bull market showed signs of decline with several analysts warning of a pullback in equities.

The Dow Jones industrial average closed the day down 69 points, or 0.2%, the S&P 500 index closed the day down 0.13%, the Nasdaq Composite closed the day down 0.57% and the Russell 2000 index finished down 1.15%.

There was $168 million on the tape a little before 11 a.m. ET. and $524 million in reported volume about one hour before the market close, sources said.

Nio Inc.’s 0% convertible bonds due 2026 were active.

While the notes were down outright, they improved dollar-neutral as the company’s equity sank after it announced a secondary offering.

While Opendoor Technologies Inc.’s 0.25% convertible notes due 2026 gave back some of its outright gains on a red day for the stock, it continued to improve dollar-neutral.

The calendar

The primary market launched September in full force with three offerings on deck and more expected in the coming weeks, sources said.

BigCommerce plans to price $300 million of five-year convertible notes after the market close on Thursday with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 32.5% to 37.5%, according to a market source.

Morgan Stanley & Co. LLC (lead left), BofA Securities Inc. and Goldman Sachs & Co. LLC are bookrunners for the Rule 144A offering, which carries a greenshoe of $45 million.

BeautyHealth plans to price $400 million of five-year convertible notes to yield 1.5% to 2% with an initial conversion premium of 27.5% to 32.5%, according to a market source.

J.P. Morgan Securities LLC and Cowen Inc. are bookrunners for the Rule 144A offering, which carries a greenshoe of $60 million.

Radius eyed

Radius plans to sell $200 million of five-year convertible notes after the market close on Wednesday with price talk for a coupon of 2% to 2.5% and an initial conversion premium of 30% to 35%.

The deal was heard to be in the market with assumptions of 550 basis points over Libor and a 32% vol., according to a market source.

Using those assumptions, the deal looked 1.83 points cheap at the midpoint of talk, sources said.

While the deal modeled cheap based on underwriters’ assumptions, some sources felt the name deserved a wider credit spread.

The company initially went public on the London Stock Exchange through a special purpose acquisition vehicle.

It redomiciled in the United States and has only been publicly traded since October 2020.

The company also has negative cash flow.

The risk-off sentiment that was pervading the market on Wednesday caused some sources to be less than enthusiastic about the deal.

While demand for the offering was not overwhelming, books were heard to have closed in the early afternoon with the deal heard to be pricing on the cheap end of coupon talk and toward the cheap end of premium talk.

The revised range for the premium was 30% to 32.5%, a source said.

Nio up on hedge

Nio’s 0% convertible notes due 2026 were down on an outright basis as the company’s equity dropped following an announced secondary offering.

However, the notes expanded dollar-neutral on the move down.

The 0% convertible notes dropped about 1.5 points outright with stock off more than 6%.

They were changing hands just shy of 86.5 versus an equity price of $38.03 in the late afternoon.

They gained about 0.5 point on a dollar-neutral basis, a source said.

There was $14 million in reported volume.

Nio’s American Depositary Shares traded to a high of $39.43 and a low of $37.81 before closing the day at $38.14, a decrease of 6.06%.

The Shanghai-based electric car manufacturer announced plans to sell up to $2 billion of its ADS after the market close on Tuesday.

The secondary offering would be the largest from a China-based company since Didi Global Inc.’s initial public offering in June, which accelerated Beijing’s crackdown on the tech sector.

Opendoor improves

While Opendoor’s 0.25% convertible notes due 2026 gave back some of their outright gains on a red day for the company’s stock, the notes improved dollar-neutral.

Opendoor’s convertible notes shaved off almost 4 points outright with stock off more than 4%.

They were changing hands at 117 versus a stock price of $18.55 in the late afternoon.

The notes improved about 0.5 point on hedge, a source said.

There was $13 million in reported volume in the late afternoon.

Opendoor’s stock traded to a high of $19.49 and a low of $18.43 before closing the day at $18.74, a decrease of 4.87%.

Mentioned in this article:

BigCommerce Holdings Inc. Nasdaq: BIGC

Nio Inc. NYSE: NIO

Opendoor Technologies Inc. Nasdaq: OPEN

Radius Global Infrastructure Inc. Nasdaq: RADI

Beauty Health Co. Nasdaq: SKIN

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