LendingTree on tap; Colony Capital gains; American Airlines active; Novavax improves

By Abigail W. Adams

Portland, Me., July 20 – With the week a heavy one for earnings reports, the convertibles primary market is expected to operate at a slower pace in the upcoming days.

However, while slower, the deal-making continues with one new offering joining the forward calendar.

LendingTree Inc. plans to price $500 million of five-year convertible notes after the market close on Tuesday with price talk for a coupon of 0.25% to 0.75% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

BofA Securities Inc., Goldman Sachs & Co. LLC and SunTrust Robinson Humphrey Inc. are joint bookrunners for the Rule 144A deal, which carries a greenshoe of $75 million.

Meanwhile, the secondary space was relatively quiet at the launch of the week with about $70 million on the tape a little over one hour into Monday’s session and $317 million less than one hour before the market close.

Few names saw concentrated trading activity with no issue logging more than $10 million in reported volume shortly before the market close, according to a market source.

While volume was light, Colony Capital Inc.’s newly priced 5.75% exchangeable notes due 2025 continued to gain on an outright and dollar-neutral basis.

American Airlines Group Inc.’s 6.5% convertible notes due 2025 were among the most actively traded issues in the secondary space with the notes down outright but improving dollar-neutral in the run-up to the company’s earnings report.

Novavax Inc.’s 3.75% convertible notes due 2023 continued to trade near its all-time high, which was reached last Friday.

Colony gains continue

Colony Capital’s 5.75% exchangeable notes due 2025 continued to gain on an outright and dollar-neutral basis their second day in the secondary space.

The 5.75% notes were seen changing hands at 107.75 with stock down early in the session, a market source said.

The notes continued to gain as stock traded off their lows as the session progressed.

The 5.75% notes were marked at 108 bid, 109 offered later in the afternoon.

They gained another 1 point on a dollar-neutral basis, a market source said.

There was $6 million in reported volume in the late afternoon.

The notes have expanded about 5 points dollar-neutral since hitting the secondary space on Friday.

The investment firm’s 3.875% convertible notes due Jan. 15, 2021 also saw some activity with several prints at 99 early in the session.

Colony’s stock traded to a high of $1.92 and a low of $1.84 before closing the day at $1.88, a decrease of 0.79%.

Proceeds from the company’s new offering will be used to repurchase the 3.875% notes prior to maturity or repay the notes at maturity.

American Airlines active

American Airlines’ 6.5% convertible notes due 2025 were once again one of the most actively traded issues in the secondary space.

While the notes continued to trade down on an outright basis, they were again improved dollar-neutral.

The 6.5% notes traded down more than 4 points outright to 85.25 in the late afternoon.

However, they expanded another 0.5 point dollar-neutral, a market source said.

There was about $9 million of the bonds on the tape heading into the market close.

American Airlines stock traded to a high of $12.51 and a low of $11.35 before closing the day at $11.47, a decrease of 3.69%.

The notes also gained about 1 point dollar-neutral last Friday, a source said.

The notes have been active and posting gains on swap in the run-up to the struggling airline’s earnings report, which is expected before the market open on Thursday.

Novavax’s new heights

Novavax’s 3.75% convertible notes due 2023 continued to trade near an all-time high, which was reached last Friday as hope for a Covid-19 vaccine continues to boost the company’s stock.

After trading up to a 130-handle last Friday, the 3.75% convertible notes came in slightly on Monday.

The notes were changing hands at 128.375 versus an equity price of $136.39 in the late afternoon, according to a market source.

Novavax stock traded to a high of $151.20 and a low of $124.10 before closing the day at $138.23, a decrease of 1.61%.

While stock closed the day in the red, it set an all-time high during intraday activity.

The 3.75% notes from the vaccine-maker were formerly in distressed territory and were changing hands in the 30 to 40 range for much of 2019.

While the notes gradually improved in 2020, they were still changing hands around 61 in mid-March, a market source said.

However, Novavax is in the running to develop a Covid-19 vaccine, which has sent its stock and convertible notes soaring to new records.

Stock has gained more than 160% since June 1.

Mentioned in this article:

American Airlines Group Inc. Nasdaq: AAL

Colony Capital Inc. NYSE: CLNY

LendingTree Inc. Nasdaq: TREE

Novavax Inc. Nasdaq: NVAX

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