Morning Commentary: Clarivate mandatories on tap; Etsy hits the aftermarket, trades up

By Abigail W. Adams

Portland, Me., June 9 – The convertibles primary and secondary markets were active on Wednesday with one $1.25 billion offering in the works and another $1 billion deal making its aftermarket debut.

Clarivate plc plans to price $1.25 billion of par-of-$100 three-year series A mandatory convertible preferred stock after the market close on Wednesday.

The deal looked cheap based on underwriters’ assumptions, sources said.

Meanwhile, Etsy Inc.’s latest offering made its aftermarket debut. The new paper was in focus and trading up on an outright and dollar-neutral basis.

Clarivate eyed

Clarivate plans to price $1.25 billion of three-year par-of-$100 series A mandatory convertible preferred stock after the market close on Wednesday with price talk for a dividend of 4.75% to 5.25% and a threshold appreciation premium of 17.5% to 22.5%.

Underwriters were marketing the deal with assumptions of 450 basis points over Libor and a 40% with a 2% skew, a source said.

Using those assumptions, the deal looked 1.52 points cheap.

The mandatory convertible preferred offering was part of a multi-billion-dollar capital raise to fund the acquisition of publishing company ProQuest.

Concurrently to the mandatory convertible preferred stock, Clarivate, a data and analytics company, is pricing a secondary offering of $750 million in common stock. In addition, certain shareholders intend to sell $250 million shares.

Etsy trades up

Etsy priced $1 billion of seven-year convertible notes after the market close on Tuesday at par with a coupon of 0.25% and an initial conversion premium of 45%, according to a company news release.

Pricing came at the rich end of talk for a coupon of 0.25% to 0.75% and at the midpoint of talk for an initial conversion premium of 42.5% to 47.5%, according to a market source.

The new paper was in focus in the secondary space and trading up on an outright and dollar-neutral basis.

The 0.25% convertible notes traded as high as 103 as stock surged shortly before the opening bell.

The notes settled to trade around 102.5 about one hour into the session.

They expanded between 1 and 1.5 points dollar-neutral, a source said.

Etsy’s stock traded to a high of $174.69 shortly after the opening bell. It came in and was changing hands at $169.86, a decrease of 0.21%, shortly before 11 a.m. ET.

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