Convertibles primary sees $2.98 billion in three deals; DISH contracts; iQIYI expands

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 traded down on an outright and dollar-neutral basis.

While new paper from iQIYI was volatile, it closed the day above par and expanded dollar-neutral.

Outside of the new deals, the secondary space was active with accounts actively trading to make room for the new deals, a source said.

DISH contracts

DISH priced $2 billion of five-year convertible notes after the market close on Wednesday at par 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.

However, the notes again traded off in the afternoon.

They were changing hands at 98.75 versus a stock price of $31.28 about one hour before the market close.

Sources pegged the notes contracted 1 to 2 points dollar-neutral.

Several sources felt the deal was unattractive with the notes looking rich at par.

However, “the bond is actually super cheap at 98.75,” a source said.

DISH’s stock traded to a high of $31.57 and a low of $30.70 before closing the day at $31.41, a decrease of 0.32%.

iQIYI volatile

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 volatile in the secondary space.

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

However, they dipped below par in intraday activity only to again trade up to 101.5 heading into the market close.

While volatile outright, the notes expanded dollar-neutral.

The notes were seen up 0.5 point dollar-neutral based off of the secondary offering.

However, the notes expanded upwards of 2.25 points dollar-neutral based off of the closing price of iQIYI’s ADSs on Wednesday, a source said.

Another source saw the notes up 1.5 points dollar-neutral.

iQIYI’s ADSs were traded to a high of $18.26 and a low of $17.00 before closing the day at $17.36, a decrease of 4.11%.

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 and was not actively trading on Thursday, sources said.

Mentioned in this article:

Atlas Corp. NYSE: ATCO

DISH Network Corp. Nasdaq: DISH

iQIYI Inc. Nasdaq: IQ

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.