Veeco convertible notes price overnight, soar on trading debut; Norwegian Cruise gains

By Abigail W. Adams

Portland, Me., May 17 – The convertibles primary market was dormant on Wednesday after an overnight deal cleared the market the previous session with prospects for an active week of issuance diminishing.

Veeco Instruments Inc. priced an upsized $205 million of six-year convertible notes after the market close on Tuesday.

The refinancing deal was “small and clubby,” a source said, with allocations going mostly to holders who participated in the exchange of the company’s outstanding notes.

The new notes hit the secondary space on a strong day for the market with risk appetite returning as debt ceiling negotiations continued.

The Dow Jones industrial average closed Wednesday up 409 points, or 1.24%, the S&P 500 index closed up 1.19%, the Nasdaq Composite index closed up 1.28% and the Russell 2000 index closed up 2.25%.

Veeco’s new notes dominated activity with the notes soaring on debut.

Meanwhile, NCL Corp. Ltd.’s 2.5% exchangeable notes due 2027 for Norwegian Cruise Line Holdings Ltd. were active with the notes gaining on a strong day for stock.

Also, Duke Energy Corp.’s 4.125% convertible notes due 2026 (Baa2/BBB) were weaker in heavy volume with the notes returning to a par-handle.

Veeco soars

Veeco priced an upsized $205 million of six-year convertible notes after the market close on Tuesday at par with a coupon of 2.875% and an initial conversion premium of 30%.

Pricing came toward the cheap end of talk for a coupon of 2.5% to 3% and at the cheap end of talk for an initial conversion premium of 30% to 35%.

The deal priced shortly after launching with books well oversubscribed, sources said.

The refinancing deal was “small and clubby,” a source said, with allocations going mostly to holders that participated in the exchange of the company’s outstanding notes.

Veeco entered into privately negotiated transactions with holders of its 3.5% convertible notes due 2025 to exchange $106 million in principal of the notes for $106 million in cash and 700,000 common shares.

The company also entered into privately negotiated transactions with holders of its 3.75% convertible notes due 2027 to exchange $100 million in principal of the notes for $92.8 million in cash and 3.8 million shares.

Veeco’s new 2.875% convertible notes due 2029 skyrocketed out of the gate.

The notes were marked at 103.25 bid, 104.25 offered versus Veeco’s closing price of $22.48 early in the session.

While the notes came in on an outright basis as the session progressed, they continued to climb dollar-neutral.

The 2.875% notes were changing hands at 102.5 in the late afternoon.

They expanded 3 to 3.5 points dollar-neutral, a source said.

There was $40 million in reported volume.

Veeco’s stock traded to a low of $21.25 and a high of $22.31 before closing at $22.12, a decrease of 1.6%.

Stock held up better than expected given the overnight offering, a source said.

Norwegian gains

Norwegian Cruise’s 2.5% exchangeable notes due 2027 saw heavy volume on Wednesday with the notes improved alongside stock.

The 2.5% notes gained about 1.5 points outright.

They traded up to 79 with a yield of 9.25% in the late afternoon, according to a market source.

There was $19 million in reported volume.

Norwegian’s stock traded to a low of $13.62 and a high of $14.40 before closing at $14.35, an increase of 6.45%.

Duke weakens

Duke’s 4.125% convertible notes due 2026 were weaker in heavy volume on Wednesday with the notes returning to a par-handle.

The 4.125% notes fell 1.25 points outright with stock off 1%.

The notes were changing hands at 100.375 in the late afternoon.

There was $25 million in reported volume.

Duke’s stock traded to a low of $92.60 and a high of $94.50 before closing at $93.02, off 1.05%.

The notes have been on a downtrend over the past week after trading in a tight range between 101.5 and 102 since pricing at par on April 3.

Mentioned in this article:

Duke Energy Corp. NYSE: DUK

Norwegian Cruise Line Holdings Ltd. NYSE: NCLH

Veeco Instruments Inc. Nasdaq: VECO

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