Cardlytics eyed; Shopify, Medallia convertibles skyrocket; NextEra Energy down outright

By Abigail W. Adams

Portland, Me., Sept. 16 – The convertibles primary market continued to roll out offerings on Wednesday with one more deal on deck.

Cardlytics Inc. plans to price $200 million of five-year convertible notes after the market close on Thursday with price talk for a coupon of 0.75% to 1.25% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

BofA Securities Inc. and J.P. Morgan Securities LLC are joint bookrunners for the Rule 144A offering, which carries a greenshoe of $30 million.

Meanwhile, new paper was in focus in the convertibles secondary space after three deals totaling $3.3 billion cleared the primary market.

Shopify Inc. priced $800 million of five-year convertible notes, Medallia Inc. sold $500 million of five-year convertible notes and NextEra Energy Inc. priced $2 billion, or 40 million units, of three-year $50-par equity units.

While Medallia’s and Shopify’s convertible notes skyrocketed on an outright and dollar-neutral basis, NextEra Energy’s equity units were trading below their discounted reoffer price.

Shopify skyrockets

Shopify priced $800 million of five-year convertible notes after the market close on Tuesday at par with a coupon of 0.125% and an initial conversion premium of 60%, according to a market source.

Pricing came in line with talk for a fixed coupon of 0.125% and richer than initial talk for an initial conversion premium of 52.5% to 57.5%, according to a market source.

Concurrently with the convertible notes offering, the company priced a secondary offering of 1.1 million class A subordinate voting shares at $900.00 per share.

The new 0.125% notes skyrocketed in the aftermarket.

The notes traded as high as 108 on an outright basis and were marked at 106.25 bid, 107 offered in the late afternoon.

The notes expanded 6 points on dollar-neutral basis, a source said.

Shopify stock traded to a high of $939.00 and a low of $884.54 before closing the day at $885.18, a decrease of 4.76%.

Medallia soars

Medallia priced $500 million of five-year convertible notes after the market close on Tuesday at par with a coupon of 0.125% and an initial conversion premium of 35%.

Pricing came at the rich end of talk for a coupon of 0.125% to 0.625% and at the midpoint of talk for an initial conversion premium of 32.5% to 37.5%, according to a market source.

The new paper skyrocketed in active trading early in the session.

The 0.125% notes traded as high as 103.5 out of the gate with stock off more than 4%.

The notes were seen on a 102-handle in the late afternoon.

They were expanded 3.5 points dollar-neutral, a market source said.

Medallia stock traded to a high of $29.02 before closing the day at a session low of $27.44, a decrease of 5.87%.

NextEra trades down

NextEra Energy priced $2 billion, or 40 million units, of three-year $50-par equity units prior to the market open on Wednesday with a reoffer price of $48.60, a dividend of 6.219% and a threshold appreciation premium of 25%.

Pricing came wider than talk for a reoffer price of $48.75 to $49.00 and in line with talk for a fixed dividend of 6.219% and a fixed threshold appreciation premium of 25%, according to a market source.

The equity units were trading down on an outright basis on Wednesday.

The units traded as low as $47 on Wednesday.

While down outright, the notes looked expanded about 50 cents dollar-neutral off of Tuesday’s closing price for stock.

“But that all depends on whether you were able to get stock off,” a source said.

NextEra stock traded to a high of $286.95 and a low of $279.13 before closing the day at $280.35, a decrease of 5.2%.

While the deal was not performing well in the aftermarket, several sources found the offering attractive.

Using assumptions of 75 bps over Libor and a 28% vol., the fair value of the deal looked to be $51.47, a source said.

However, stock was down on the heels of the offering, which has to be taken into account when determining the true value of the deal, the source said.

“The stated yield is irresistible,” another source said. With the offering registered, the deal appealed to retail investors too.

Sources attributed the lackluster performance of the units to the fact that the large offering was completed as an overnight.

Mentioned in this article:

Medallia Inc. NYSE: MDLA

NextEra Energy Inc. NYSE: NEE

Shopify Inc. NYSE: SHOP

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