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Morning Commentary: Wayfair offers $500 million convertible notes; HC2 taps market
By Abigail W. Adams
Portland, Me., Nov. 14 – While market conditions caused one potential convertibles issuer to withdraw its offering, more new paper is on deck.
Wayfair Inc. plans to price $500 million of six-year convertible notes after the market close on Wednesday with price talk for a coupon of 0.625% to 1.125% and an initial conversion premium of 32.5% to 37.5%, according to a market source.
Citigroup Global Markets Inc. and Goldman Sachs & Co. LLC are the joint bookrunners for the Rule 144A deal, which carries a greenshoe of $75 million.
Wayfair’s newest convertible notes offering was surprising to some market sources, given the volatility in the markets that caused Ribbon Communications Inc. to withdraw its $150 million offering of five-year notes.
While the e-commerce company, which is focused on home décor, marketed its new convertible notes offering, the company’s outstanding 0.375% convertible notes due 2022 were active in the secondary space.
The notes dropped about 6 points outright to trade just shy of 109 early in the session, according to Trace data.
Wayfair stock was down 2.52% to $90.37 early in the session.
Meanwhile, HC2 Holdings Inc. priced $55 million of four-year convertible notes with a coupon of 7.5% and an initial conversion premium of 20% prior to the market open on Wednesday.
Jefferies LLC was the bookrunner for the Rule 144A deal, which priced alongside a $470 million offering of three-year senior notes.
The senior notes priced with a coupon of 11½% and a reoffer price of 98.75 to yield 12%.
HC2 initially launched a $535 million offering of five-year senior notes on Oct. 22 but execution of the deal was sidelined due to market volatility.
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