Atlas Air, RealPage add deals to calendar; Yahoo! firms on stock buyback; SINA stronger

By Stephanie N. Rotondo

Seattle, May 16 – The convertible bond market’s new issue calendar started to build up after Tuesday’s close.

Atlas Air Worldwide Holdings Inc. announced a $250 million underwritten offering of convertible senior notes due 2024.

Morgan Stanley & Co. LLC, BNP Paribas Securities Corp. and Citigroup Global Markets Inc. are the joint bookrunners.

Conversions will be settled in cash, common stock or a combination, at the company’s option. The notes will be contingently convertible prior to Sept, 1, 2023 and convertible at any time after that date.

The notes are non-callable.

The Purchase, N.Y.-based aviation services company will use the proceeds to repay higher-cost revolving credit facility borrowings, to enhance business and financial flexibility, to support long-term growth, to fund the cost of hedging transactions and for general corporate purposes.

Meanwhile, RealPage Inc. said it was launching a $300 million Rule 144A offering of convertible senior notes due Nov. 15, 2022.

Conversions will be settled in cash, common stock, or both, at the company’s option. The issue will be contingently convertible prior to May 15, 2022, or at any time after that date.

A portion of the deal’s proceeds will go toward hedging transactions. The Richardson, Texas-based software company will use the remaining funds for general corporate purposes, which may include future acquisitions.

Price talk on both deals was unavailable as of press time.

As for the secondary, liquidity continued to be thin.

“It’s painful to sit here today,” one trader lamented.

Still, Yahoo! Inc. was getting some play after the company announced a $3 billion Dutch auction tender offer for its stock.

The company’s 0% convertible notes due 2019 were boosted by the news.

SINA Corp.’s 1% convertible notes due 2018 were also moving higher on the day, after the company reported earnings that beat expectations.

A trader also noted that Spirit Realty Capital Inc.’s 3.75% convertible notes due 2021 continued to be on the radar.

The trader saw the issue trading “either side of 98,” which is about where the paper has been trading since the company reported weak first-quarter results earlier in the month. That equated to a 79% premium over parity, he said, and a 4.3% return.

The common stock, by comparison, has a yield of nearly 10%, the trader pointed out.

“So that’s a great trade...for the guy that sold them,” he said.

The equity was off nearly 2.75% on Tuesday, though there was no fresh news to pull the shares down.

Wahoo! for Yahoo!

Yahoo!’s 0% convertible notes were up about a point outright on Tuesday, as the company launched a $3 billion Dutch auction tender offer for its common stock.

The trader said the convertibles were trading at 107.

“That’s probably the highest they’ve ever been,” he said, noting that parity was 94.61.

“They are buying back all this stock,” the trader added. “So that’s a big help.”

Another market source pegged the paper at 107 bid, 107.5 offered.

The underlying shares jumped $1.10, or 2.21%, to $50.96.

The tender offer is being done ahead of the company’s pending sale to Verizon Communications Inc. The stock will be repurchased at a price between $44.74 and $50.79.

The offer will expire June 13.

SINA sizzles

SINA’s first-quarter results came in better than expected on Tuesday, which helped the company’s 1% convertible trade up to around 107.

According to one source, that compared to previous round-lot trades around par. Another source called the bonds up over 5 points.

As for the company’s equity, it jumped nearly 18% to $99.04.

For the first quarter, the Beijing-based telecommunications company reported adjusted earnings of $37.6 million, or 52 cents per share. Revenue was up 40% from the previous year at $275.5 million.

Analysts had forecast adjusted EPS of 14 cents on revenue of $265.1 million.

In particular, SINA saw improvement at its Weibo unit. Active monthly users popped 30% to 340 million, as average daily active users were up over 28% to 154 million.

Additionally, the company said advertising and non-advertising revenue both increased about 40%.

Mentioned in this article:

Atlas Air Worldwide Holdings Inc. Nasdaq: AAWW

RealPage Inc. Nasdaq: RP

SINA Corp. Nasdaq: SINA

Spirit Realty Capital Corp. NYSE: SRC

Yahoo! Inc. Nasdaq: YHOO

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