Morning Commentary: DISH, iQIYI, Atlas Corp. convertibles hit the aftermarket; DISH dips

By Abigail W. Adams

Portland, Me., Dec. 17 – New convertibles paper was in focus on Thursday with $2.975 billion in new securities flooding the secondary market.

DISH Network Corp. priced $2 billion of five-year convertible notes, iQIYI Inc. priced $800 million of six-year convertible notes and Atlas Corp. priced $175 million of five-year exchangeable notes after the market close on Wednesday.

The new paper followed different trajectories in the secondary space.

In contrast to the majority of deals that have priced in recent weeks, DISH was trading below par in the aftermarket.

However, new paper from iQIYI was putting in a strong performance in the aftermarket.

DISH lags

DISH priced $2 billion of five-year convertible notes after the market close on Wednesday with a coupon of 0% and an initial conversion premium of 30%.

Pricing came in line with talk for a fixed coupon of 0% and at the cheap end of talk for an initial conversion premium of 30% to 40%, according to a market source.

The new paper was weak in the aftermarket.

The 0% notes were marked at 98.5 bid, 99 offered pre-open, a source said.

They were changing hands between 99.5 and 99.75 about one hour after the opening bell, another source said.

DISH’s stock was trading at $31.24, a decrease of 0.84%, shortly before 11 a.m. ET.

iQIYI trades up

iQIYI priced $800 million of six-year convertible notes after the market close on Wednesday at par with a coupon of 4% and an initial conversion premium of 27.5%.

Pricing came at the midpoint of talk for a coupon of 3.75% to 4.25% and an initial conversion premium of 25% to 30%, according to a market source.

Concurrently, the company priced a secondary offering of 40 million American Depositary Shares at $17.50 per share.

The new paper was trading up on an outright basis early in the session.

They were marked changing hands between 101.5 and 102 early in the session, a source said.

The notes were in focus with estimated volume of $127 million about one hour into the session.

iQIYI’s ADSs were trading at $17.76, a decrease of 1.93%, shortly before 11 a.m. ET.

Atlas taps market

Atlas Corp. priced $175 million of five-year exchangeable notes after the market close on Wednesday at par at the cheap end of talk with a coupon of 3.75% and an initial exchange premium of 27.5%.

Price talk was for a coupon of 3.25% to 3.75% and an initial exchange premium of 27.5% to 32.5%, according to a market source.

The notes will be issued by subsidiary Seaspan Corp. and exchangeable for Atlas shares.

The small offering was wall-crossed, sources said.

The new paper was not active early Thursday.

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