Morning Commentary: Primary prices $850 million over four deals; Akamai’s $1 billion deal on tap

By Abigail W. Adams

Portland, Me., May 16 – Four new deals totaling $850 million hit the secondary market on Wednesday with a $1 billion offering set to price after the market close.

Alteryx, Inc. priced $200 million of five-year convertible notes after the market close on Tuesday with a discounted issue price of 98 and at the cheap end of talk with a coupon of 0.5% and an initial conversion premium of 42.5%.

Price talk had been for a coupon of 0% to 0.5% and an initial conversion premium of 42.5% to 47.5%, according to a market source.

Price talk was revised in the middle of the bookbuilding process to include the issue discount, a source said.

While the new 0.5% notes briefly traded up to 99, they were mostly trading on a 98 handle or below, a market source said. They were seen at 97.75 bid, 98.75 offered early in the session.

New Relic Inc. priced $435 million of five-year convertible notes prior to the market open on Wednesday at the mid-point of talk with a coupon of 0.5% and an initial conversion premium of 27.5%.

Price talk had been for a coupon of 0.25% to 0.75% and an initial conversion premium of 25% to 30%, according to a market source.

New Relic’s 0.5% notes were seen at 100.75 bid early in the session.

Prospect Capital Corp. priced an upsized $90 million add-on to its 4.95% convertible notes due 2022 prior to the market open on Wednesday at the cheap end talk with an issue price of 98.4 to yield 5.38%, according to an FWP filing with the Securities and Exchange Commission.

Price talk had been for an issue price of 98.4 to 98.5 with an effective yield of 5.38% to 5.36%, according to a market source.

The deal was marketed with a credit spread of 160 basis points and a 15% vol., a market source said.

The 4.95% convertible notes due 2022 were seen trading at 98.625 early in the session.

KKR Real Estate Finance Trust Inc. priced $125 million of five-year convertible notes prior to the market open on Wednesday at the cheap end of talk with a coupon of 6.125% and an initial conversion premium of 10%.

Price talk had been for a coupon of 5.625% to 6.125% and an initial conversion premium of 10% to 15%, according to a market source.

The deal was marketed with a credit spread of 325 bps and a 15% vol., which modeled 2 points cheap at the mid-point of talk, a market source said.

The high coupon on the convertible notes offering is due to the high dividend of KKR REIT’s common stock, a market source said.

While the secondary market works to digest $850 million in new paper, more is still to come.

Akamai Technologies Inc. plans to price $1 billion of seven-year convertible notes after the market close on Wednesday with price talk for a coupon of 0% to 0.25% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

The deal is being marketed with a credit spread of 100 bps and a 34% vol., which models about 0.75 point cheap at the mid-point of talk, a market source said.

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