Morning Commentary: MP Materials convertibles eyed; $2.35 billion in six deals price

By Abigail W. Adams

Portland, Me., March 23 – New paper was in focus on Tuesday with two deals totaling $1.5 billion set to price after the market close and $2.35 billion in six deals making their aftermarket debut.

MP Materials Corp. plans to price $500 million of five-year green convertible notes and ViacomCBS Inc. plans to sell $1 billion par-of-$100 three-year series A mandatory convertible preferred stock after the market close on Tuesday.

MP Materials’ offering looked cheap based on underwriters’ assumptions.

However, the convertibles market was beginning to show signs of fatigue with the influx of new paper.

Redfin Corp. priced $500 million of six-year convertible notes; JetBlue Airways Corp. priced $650 million of five-year convertible notes; Groupon Inc. sold $200 million of five-year convertible notes; Macom Technology Solutions Holdings Inc. priced $400 million of five-year convertible notes; TripAdvisor Inc. brought $300 million of five-year convertible notes and Liberty TripAdvisor Holdings, Inc. priced $300 million of exchangeable debentures due 2051.

In stark contrast to the beginning of the year, deals were beginning to price at the midpoint or wide end of talk.

Several of the deals were volatile on an outright basis early in the session.

However, all were holding above par despite a heavy start for equities with many expanding dollar-neutral.

MP Materials on tap

MP Materials plans to price $500 million of five-year green convertible notes after the market close on Tuesday with price talk for a coupon of 0% to 0.25% and an initial conversion premium of 25% to 30%, according to a market source.

Underwriters were marketing the deal with assumptions of 450 basis points over Libor and a 45% vol., according to a market source.

Using those assumptions, the deal looked 3.78 points cheap at the midpoint of talk.

Redfin comes cheap

Redfin priced $500 million of six-year convertible notes after the market close on Monday at par at the cheap end of talk with a coupon of 0.5% and an initial conversion premium of 35%.

Price talk was for a coupon of 0% to 0.5% and an initial conversion premium of 35% to 40%, according to a market source.

The notes traded as low as 99.5 and as high as 101.625 shortly after the opening bell.

They were wrapped around par shortly before 11 a.m. ET.

Redfin’s stock was changing hands at $66.95, a decrease of 3.36%, shortly before 11 a.m. ET.

JetBlue at the mids

JetBlue priced $650 million of five-year convertible notes after the market close on Monday at par at the midpoint of talk with a coupon of 0.5% and an initial conversion premium of 35%.

Price talk was for a coupon of 0.25% to 0.75% and an initial conversion premium of 32.5% to 37.5%, according to a market source.

The notes were trading in a wide range on an outright basis.

They traded as low as 99.75 and as high as 104 early in the session.

The notes were changing hands at 102.5 shortly before 11 a.m. ET.

JetBlue’s stock was trading at $19.52, an increase of 1.62%, shortly before 11 a.m. ET.

Groupon above par

Groupon priced $200 million of five-year convertible notes after the market close on Monday at par with a coupon of 1.125% and an initial conversion premium of 30%.

Pricing came at the cheap end of talk for a coupon of 0.625% to 1.125% and at the midpoint of talk for an initial conversion premium of 27.5% to 32.5%, according to a market source.

The TripAdvisors

TripAdvisor sold $300 million of five-year convertible notes after the market close on Monday at par with a coupon of 0.25% and an initial conversion premium of 37.5%.

Pricing came at the cheap end of talk for a coupon of 0% to 0.25% and at the midpoint of talk for an initial conversion premium of 35% to 40%, according to a market source.

The notes traded as low as 99.875, which was most likely the result of flippers exiting the deal, a source said.

However, the majority of prints were between par and 101.

Liberty TripAdvisor priced $300 million of exchangeable debentures due 2051 after the market close on Monday at par with a coupon of 0.5% and an initial exchange premium of 30%.

Pricing came at the cheap end of talk for a coupon of 0.25% to 0.5% and an initial exchange premium of 30% to 35%, according to a market source.

TripAdvisor’s stock traded down to $51.09, a decrease of 4.82%, shortly before 11 a.m. ET.

Macom at par

Macom Technology priced $400 million of five-year convertible notes after the market close on Monday at par with a coupon of 0.25% and an initial conversion premium of 40%.

Pricing came at the cheap end of talk for a coupon of 0% to 0.25% and at the midpoint of talk for an initial conversion premium of 37.5% to 42.5%, according to a market source.

The notes were changing hands in a tight range between 100.25 and 100.5 early in the session.

Macom’s stock was trading at $58.72, an increase of 0.10%, shortly before 11 a.m. ET.

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