Morning Commentary: InterDigital, MFA Financial hit the market; Enphase Energy on tap

By Abigail W. Adams

Portland, Me., May 30 – Despite the volatility in the markets, the primary market returned to action with two new deals pricing prior to the market open on Thursday and one more slated to price after the market close.

InterDigital Inc. priced $350 million of five-year convertible notes and MFA Financial Inc. priced $200 million of five-year convertible notes prior to the market open Thursday.

InterDigital’s new notes expanded on their market debut while MFA Financial’s notes were seen hovering around their issue price.

Enphase Energy Inc. plans to price $120 million of five-year convertible notes after the market close Thursday.

Proceeds will be used to repurchase the company’s deep-in-the-money 4% convertible notes due 2023.

InterDigital expands

InterDigital priced $350 million of five-year convertible notes at par with a coupon of 2% and an initial conversion premium of 30% prior to the market open on Thursday.

Pricing came at the midpoint of talk for a coupon of 1.75% to 2.25% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

The notes were performing well in the secondary space. They traded up to 102 as stock surged early in the session.

The notes were expanded 0.5 point to 0.75 point dollar-neutral, a market source said.

Proceeds from the new offering will be used to repurchase a portion of InterDigital’s outstanding 1.5% convertible notes due 2020 in privately negotiated transactions.

The mobile technology research and development company appeared to be buying the 1.5% notes back for 104.868.

They were up about 1.5 points outright and expanded about 0.75 point from their previous levels, a source said.

InterDigital stock was changing hands at $64.48, an increase of 3.12%, shortly before 11 a.m. ET.

MFA Financial’s discount

MFA Financial priced $200 million of five-year convertible notes prior to the market open on Thursday with a coupon of 6.25%, a discounted reoffer price of 99 and an initial conversion premium of 10%, according to an FWP filing with the Securities and Exchange Commission.

Pricing came at the cheap end of talk for a discount of 99, a coupon of 6% to 6.25% and an initial conversion premium of 10%, according to a market source.

The new notes were hovering around their issue price early in Thursday’s session.

They were changing hands between 99.125 and 99.375, a market source said.

MFA Financial stock was $7.16, a decrease of 0.9%, shortly before 11 a.m. ET.

Enphase on tap

Enphase Energy plans to price $120 million of five-year convertible notes after the market close on Thursday.

Price talk is for a fixed coupon of 1% and an initial conversion premium of 25% to 30%, according to a market source.

Proceeds will be used to repurchase the company’s 4% convertible notes due 2023 in privately negotiated transactions with one or more holders.

The deep-in-the-money convertible notes have $60 million outstanding. They were last seen changing hands around 194.

Enphase Energy stock has skyrocketed since the 4% convertible notes priced in August 2018. Stock was $5.05 when the 4% notes prices.

Enphase stock was changing hands at $14.96, a decrease of 8.16%, shortly before 11 a.m. ET.

Stock hit a 52-week high on May 29, closing the day at $16.29.

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