Morning Commentary: Convertible primary active; Liberty Media on tap; RingCentral, Corium price

By Abigail W. Adams

Portland, Me., March 1 – The primary market has been active in the convertibles space with two deals bringing new paper to the market on Thursday and one new deal set to price after the market close.

RingCentral Inc. priced an upsized $400 million of five-year convertible notes after the market close on Wednesday at the rich end of talk with a coupon a 0% and an initial conversion premium of 30%.

Price talk had been for a coupon of 0% to 0.5% and an initial conversion premium of 25% to 30%, according to a market source.

Morgan Stanley & Co. LLC, Goldman Sachs & Co., Deutsche Bank Securities Inc. and BofA Merrill Lynch are the joint bookrunners for the Rule 144A deal, which carries an upsized greenshoe of $60 million.

The initial size of the deal had been $350 million with a greenshoe of $52.5 million.

The new notes were trading below par on their market debut. They were seen in a range of 98.5 to 99 early in Thursday’s session, according to a market source.

The deal initially looked attractive but was “butchered” with pricing, a market source said.

Corium prices overnight

In an overnight deal, Corium International Inc. priced $100 million of seven-year convertible notes prior to the market open Thursday at par with a coupon of 5% and an initial conversion premium of 32.5%.

Pricing came at the cheap end of talk for a coupon of 4.5% to 5% and within talk for an initial conversion premium of 30% to 35%.

Cantor Fitzgerald & Co. is the manager for the Rule 144A deal, which carries a greenshoe of $20 million.

The new 5% notes from the Menlo Park, Calif.-based commercial-stage biopharmaceutical company were not seen trading early in Thursday’s session.

Corium stock was down 14.42% early Thursday, which was not a surprise, a market source said. “If half the book was arbs, there were going to be a lot of shares for sale,” the source said.

The pricing of the notes looked appropriate, the source said.

The deal is Cantor’s first bookrun deal in several years. “And it’s in health care,” a market source said. “That’s interesting.”

Cantor recently assembled a team of well-known names in equity-linked capital markets origination, sales and trading to build out its presence in the convertibles space.

Liberty Media on tap

Liberty Media Corp. plans to price $400 million of exchangeable senior debentures due 2048 after the market close on Thursday with price talk for a coupon of 1.875% to 2.125% and an exchange premium of 27.5% to 30%, according to a market source.

The notes are convertible into either Sirius XM Holdings Inc. common stock, Liberty’s series C Liberty Sirius XM common stock, or a combination of both forms of stock and cash at the company’s option.

BNP Paribas Securities Corp., Citibank and UBS Securities LLC are the joint bookrunners for the Rule 144A deal, which carries a greenshoe of $60 million.

The deal is “another John Malone special,” a market source said. “He seems to do one of these every year.”

“Liberty is one of the great deal-making companies,” another source said. “Liberty does a phenomenal job of monetizing its stakes in media companies like Sirius XM.”

The Englewood, Colo.-based media conglomerate owns a 70% stake in Sirius XM Holdings, which is the parent company for satellite radio company Sirius XM Radio Inc.

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