Gannett on tap; Tesla convertible notes see slight rebound; Macquarie, Euronet active

By Abigail W. Adams

Portland, Me., April 3 – Trading volume continued to be light in the convertibles space on Tuesday, but that may change with new paper entering the space prior to the market open on Wednesday.

In an overnight deal, Gannett Co. Inc. plans to price $175 million of six-year convertible notes prior to the market open on Wednesday.

Price talk is for a coupon of 4.625% to 4.875% and an initial conversion premium of 22.5% to 25%, according to a market source.

Jefferies & Co. is the bookrunner for the Rule 144A deal, which carries a greenshoe of $26.25 million. The notes are non-callable until April 15, 2022 and then are subject to a 130% hurdle with a make-whole.

The notes are contingently convertible until Jan. 15, 2024 and then are freely convertible until the close of business on the second trading day preceding their maturity on April 15, 2024, according to a company news release.

Tesla Inc.’s three tranches of convertible notes continued to dominate trading in the secondary market as the electric car manufacturer continues to occupy the headlines.

The notes improved slightly on a dollar-neutral basis as the company’s stock rebounded, a market source said.

Macquarie Infrastructure Co. LLC’s 2.875% convertible notes due 2019 were active on the tape and solidified around par.

The infrastructure investment company’s affiliate announced the launch of its second regional infrastructure fund in Asia on Tuesday.

Euronet Worldwide Inc.’s 1.5% convertible notes due 2044 were also active on an otherwise quiet day with the notes dropping about 2 points outright as the Leawood, Kan.-based credit card service company’s stock dropped 5%.

Tesla

Tesla once again dominated trading in the convertibles space with the three tranches of convertible notes looking better dollar neutral as the company’s stock rebounded, a market source said.

Tesla’s 0.25% convertible notes due 2019 were largely wrapped around 99 in active trading on Tuesday and at times broke par.

With more than $33 million bonds in play during Tuesday’s session, the 0.25% notes were the most active in the convertibles space.

Tesla’s 1.25% convertible notes due 2021 traded to a low of 96.44 and to a high of 99.18 before closing the day at 98.88, according to Trace data. More than $16 million bonds were in play by late afternoon.

Tesla’s 2.375% convertible notes due 2022 were up slightly on an outright basis with trades in a range of 102 to 104.

Each of the three tranches were firmer 0.25 point dollar neutral, a market source said.

The soon-to-mature convertible notes Tesla took on when it acquired Solar City Corp. also saw a slight rebound.

The 1.625% convertible notes due 2019 traded in a range of 92 to 94 during Tuesday’s session. The 2.75% convertible notes continued to trade around 98.

Tesla stock wavered between a low of $254.49 and a high of $273.35 before closing Tuesday at $267.53, an increase of 5.96%.

Tesla has struggled since last week when the company experienced an onslaught of negative publicity, a credit downgrade and speculation it would again miss its production target for its Model 3 sedans and would need to raise more capital.

Tesla stock was up on Tuesday after the company reported it had produced 2,020 Model 3 sedans in the last week of March.

While still missing its production target of 2,500 Model 3 sedans per week by the end of March, Tesla announced it expects to ramp up production rapidly, staving off any need for additional financing.

While Tesla has stated there will be no need for an additional capital raise, Bloomberg reported the company will run out of funds before the end of the year without more financing.

Macquarie active

Macquarie’s 2.875% convertible notes due 2019 saw a day of active trading after the company announced it raised $3.3 billion for its second regional infrastructure fund in Asia.

The 2.875% notes were largely solidified at par with more than $12.28 million bonds in play during Tuesday’s session.

Macquarie stock closed Tuesday at $37.52, an increase of 2.23%.

Macquarie increased the conversion ratio on the 2.875% notes to 12.4912 in mid-March.

Macquarie’s Australia-based affiliate, Macquarie Infrastructure and Real Assets, an infrastructure asset manager, announced the launch of the Macquarie Asia Infrastructure Fund 2 on Tuesday after raising $3.3 billion in investor commitments.

The fund will be used to support toll roads, renewable energy and petrochemical storage assets in India, the Philippines, Singapore and China, VC Circle reported.

Euronet drops

Euronet’s 1.5% convertible notes due 2044 were down in active trading during Tuesday’s session as the credit card service company’s stock dropped. The 1.5% notes were down 2 points outright to trade around 112.

Euronet stock closed Tuesday at $72.26, a decrease of 5.06% and a new 52-week low.

Euronet’s 1.5% convertible notes have steadily traded down over the past two weeks as the company’s stock also spiraled downwards.

The notes were in the 124 to 128 range for much of February and March, according to Trace data.

Euronet saw unusually high options trading on Monday with 772 put options purchased, according to the Registrar Journal.

Mentioned in this article:

Euronet Worldwide Inc. Nasdaq: EEFT

Gannett Co. NYSE: GCI

Macquarie Infrastructure Co. LLC NYSE: MIC

Tesla Inc. Nasdaq: TSLA

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