Landmark convertible preferreds on tap; Blackstone Mortgage at par; Live Nation active

By Abigail W. Adams

Portland, Me., March 26 – The convertibles secondary market was quiet on Monday with the highly liquid market mainstays and the $1.19 billion in new paper that priced last week slow to trade.

While the secondary market was quiet on Monday with only $256 million on the tape by the late afternoon, the primary market prepared a new convertible preferred stock offering.

Landmark Infrastructure Partners LP plans to price $25-par series C floating-to-fixed rate cumulative perpetual redeemable convertible preferred units after the market close on Tuesday with price talk for a dividend of 6.5% to 7% and a fixed initial conversion premium of 15%, according to a market source.

The size of the offering is flexible and will be based on demand, the source said.

Raymond James and UBS Investment Bank are joint bookrunners for the offering, which carries a greenshoe.

The convertible preferred units will accrue interest at a rate that is either the greater of a fixed dividend or Libor plus a to-be-determined credit spread until 2025 when they will switch to a fixed dividend.

Of the four new deals that hit the market on Friday, Blackstone Mortgage Trust Inc.’s 4.75% convertible notes due 2023 were the only notes seen trading during Monday’s session.

While hovering around their issue price of 98.5 on their market debut, the new notes “were creeping up” and spent much of their second day in the market at par, according to a market source.

Plug Power Inc.’s 5.5% convertible notes due 2023, Accelerate Diagnostics Inc.’s 2.5% convertible notes due 2023 and GSV Capital Corp.’s 4.75% convertible notes due 2023 were not seen on the tape on Monday. There has been little trading activity of the new notes since they made their market debut on Friday.

Live Nation Entertainment, Inc.’s recently priced 2.5% convertible notes due 2023 were among the top volume movers of the day with $8.5 million bonds on the tape late in Monday’s session.

The 2.5% notes are “an attractive risk-controlled way to invest in LYV’s growth story,” according to the Barclay equity research report “Live Nation: Platform Scale & Network Benefits to Drive Long-Term Growth.”

Insmed Inc.’s 1.75% convertible notes due 2025 remained wrapped around 88 in scattered trades on Monday after seeing a sell-off on Friday. The notes dropped about 3 points on Friday to the 87 to 88 range. Insmed stock was up to $22.12 on Monday, an increase of almost 2% early in Monday’s session after dropping 8.6% on Friday.

The 1.75% notes priced in late January and have languished in the low to mid-90s for much of their existence.

Blackstone up to par

Blackstone Mortgage’s 4.75% notes due 2023 saw par in small-volume trades during Monday’s session after hovering around their 98.5 issue price during their market debut on Friday. The notes traded in a wide range on Monday, trading as low as 97.5.

While most trades were in small blocks, the majority of trades on Monday were at par. Blackstone stock closed Monday at $31.65, an increase of 1.51%.

Blackstone priced $220 million of the 4.75% notes on March 22 with an issue price of 98.5. The new notes waivered around their issue price on their market debut on Friday, trading at times above it and at times below it.

“It dipped below the issue price, but it’s creeping up,” a market source said.

While trading volume of the notes has been light, Blackstone Mortgage’s 4.75% notes have been the most active of the new paper that hit the market on Friday.

Friday’s deals

Plug Power’s 5.5% convertible notes, Accelerate Diagnostics’ 2.5% convertible notes and GSV Capital’s 4.75% convertible notes were again not seen trading during Monday’s session, their second day in the market.

The deals were also not active on the tape on their market debut Friday while there were some small late-day trades during Friday’s session. While only $40 million bonds were priced, GSV’s 4.75% notes were seen trading at 100.25 on Friday, a market source said.

The 4.75% notes will be used to repurchase a portion of the company’s 5.25% notes due Sept. 15, 2018. “It was pretty tightly allocated,” a market source said.

While not seen trading on Monday, Plug Power’s 5.5% convertible notes did see a late-day trade on Friday. There was a single $1 million trade late Friday at par, a market source said. “It was a one-sided trade,” the source said. “It looks like the dealer bought it back.”

Plug Power’s new convertible notes have not and most likely will not see much trading action. “Those will probably just sit around and collect a coupon,” a market source said.

Accelerate Diagnostics’ 2.5% convertible notes were seen at 100.25 bid, 100.5 offered late on Friday but were not seen trading on Monday. Accelerate Diagnostics has a decent volatility, which was most likely the driving force of the trade, a market source said.

In with the new

While the new paper that priced last week was slow to trade on Monday, Live Nation’s recently priced 2.5% convertible notes due 2023 were active. The notes were wrapped around 101 for much of Monday’s session and were seen trading at 101.35 versus an equity price of $43.29 late in the afternoon.

The 2.5% notes due 2023 are an “attractive risk-controlled way to invest in LYV’s growth story,” according to the Barclays report.

With a longer duration, a lower price, and a higher current yield, the new 2.5% notes offer a better risk reward than Live Nation’s 2.5% convertible notes due 2019, the report said.

Live Nation’s 2.5% notes due 2023 carry a current yield of 2.5%, a current premium of 61.5% and delta of 41%, according to the report. The risk reward of the new 2.5% notes is 30%/7% versus a risk reward of 84%/77% of the 2.5% convertible notes due 2019.

Live Nation’s 2.5% notes due 2019 were seen trading between 129 and 131 during Monday’s session. Live Nation stock closed Monday at $43.31, an increase of 3.37%.

Live Nation has “robust” underlying drivers of revenue growth with the momentum in its core concert business expected to continue, according to the Barclays report.

Mentioned in this article:

Accelerate Diagnostics Inc. Nasdaq: AXDX

Blackstone Mortgage Trust, Inc. NYSE: BXMT

GSV Capital Corp. Nasdaq: GSVC

Insmed Inc. Nasdaq: INSM

Landmark Infrastructure Partners LP Nasdaq: LMRK

Live Nation Entertainment, Inc. NYSE: LYV

Plug Power Inc. Nasdaq: PLUG

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