Morning Commentary: MongoDB hits the market; Fortive, Momo on tap

By Abigail W. Adams

Portland, Me., June 26 – The convertibles space will end a high-volume month of new issuances with a billion-dollar week of new deals.

MongoDB, Inc. priced an upsized $250 million in six-year convertible notes prior to the market open on Tuesday with a coupon of 0.75% and an initial conversion premium of 27.5%.

The notes were seen trading below par with the stock down early in the session.

Fortive Corp. plans to price $1 billion, or 1 million shares, of three-year series A mandatory convertible preferred stock and Momo Inc. plans to price $650 million of seven-year convertible notes after the market close on Tuesday. Both deals looked cheap, sources said.

MongoDB below par

MongoDB’s newly price 0.75% convertible notes due 2024 were trading down alongside its stock early in Tuesday’s session.

The New York-based software company and developer of an open-source database platform priced an upsized $250 million six-year convertible note offering at the midpoint of talk for a coupon of 0.5% to 1% and at the cheap end of talk for an initial conversion premium of 27.5% to 32.5%.

The initial size of the deal had been $200 million. The greenshoe was also upsized to $50 million from $30 million.

The notes were seen trading around 99.5 with stock down more than $1 early in Tuesday’s session.

Fortive eyed

Fortive plans to price $1 billion in series A mandatory convertible preferreds after the market close on Tuesday with price talk for a dividend of 5% to 5.5% and an initial conversion premium of 17.5% to 22.5%, according to a market source.

Underwriters are marketing the deal with a credit spread of 100 basis points over Libor and a 20% vol., market sources said. The deal looks to be about 3 points cheap, sources said.

Momo eyed

Momo plans to price $650 million of seven-year convertible notes after the market close on Tuesday with price talk for a coupon of 1% to 1.5% and an initial conversion premium of 40% to 45%, according to a market source.

Underwriters are marketing the deal with a credit spread of 300 bps over Libor and a 40% vol., sources said. The deal modeled about 2.7 points cheap at the mid-point of talk.

However, some sources pegged the credit spread wider at 400 bps.

The Beijing-based mobile social networking platform would probably have a credit spread of around 150 bps if it was a United States-based company, a market source said.

However, the credit spread is wider due to the complications involved with American depositary shares and other factors involving China-based corporations, the source said.

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