Convertibles primary launches $4.15 billion in seven deals; iRhythm, MP Materials eyed

By Abigail W. Adams

Portland, Me., March 4 – The convertibles primary market gave new meaning to opening the floodgates on Monday with seven deals totaling $4.15 billion launching.

MicroStrategy Inc. is in the market with a $600 million offering of six-year convertible notes; Tandem Diabetes Care Inc. with a $250 million offering of five-year convertible notes; Kosmos Energy Ltd. with a $300 million offering of six-year convertible notes; LivaNova plc with a $300 million offering of five-year convertible notes; and Albemarle Corp. with a $1.75 billion, or 35 million, three-year $50-par depositary shares representing a 1/20th interest in a share of $1,000-par series A mandatory convertible preferred stock.

The five deals are slated to price post-close on Tuesday.

MP Materials Corp. plans to price $500 million of six-year convertible notes and iRhythm Technologies Inc. plans to price $450 million of long five-year convertible notes after the market close on Monday.

The deals looked cheap based on underwriters’ assumptions and were heard to be doing well with demand for new paper strong.

While refinancings have kept the convertibles primary active, convertible issuers also continue to address their looming maturities through other means, such as buybacks and exchanges.

Sabre Corp. became the latest issuer to extend its maturity profile through an exchange.

The new deal activity comes on a sideways day for markets with equity indexes either side of unchanged after last week’s slew of macro data.

The Dow Jones industrial average closed Monday down 98 points, or 0.25%, the S&P 500 index closed down 0.12%, the Nasdaq Composite index closed down 0.41% and the Russell 2000 index closed down 0.10%.

There was $67 million in reported volume about one hour into the session and $530 million in the late afternoon with topical news sparking large moves in outstanding issues.

Super Micro Computer Inc.’s 0% convertible notes due 2029 surged alongside stock on news the company would be added to the S&P 500 index.

JetBlue Airways Corp. and Spirit Airlines, Inc. were again in the spotlight after the termination of their merger agreement.

The news sparked heavy buying of JetBlue’s 0.5% convertible notes due 2026 while Spirit Airlines’ 1% convertible notes due 2026 sank further into distress in light volume.

iRhythm to tap market

In its debut appearance in the convertibles market, iRhythm plans to price $450 million of long five-year convertible notes after the market close on Monday with price talk for a coupon of 1.5% to 2% and an initial conversion premium of 27.5% to 32.5%.

The deal was heard to be in the market with assumptions of 350 basis points over SOFR and a 42% vol.

Using those assumptions, the deal looked almost 4 points cheap at the midpoint of talk, a source said.

The offering was in hot demand, a source said.

The offering represented new money entering the market.

MP Materials refinances

MP Materials plans to sell $500 million of six-year convertible notes after the market close on Monday with price talk for a coupon of 2.75% to 3.25% and an initial conversion premium of 37.5% to 42.5%.

The deal was heard to be in the market with assumptions of 500 bps over SOFR and a 45% vol.

Using those assumptions, the deal looked about 2.375 points cheap at the midpoint of talk, a source said.

The deal is coming as a refinancing with proceeds to be used to repurchase a portion of its 0.25% green convertible notes due 2026 in privately negotiated transactions.

The deal was heard to be doing well with the refinancing driving demand.

However, the rare earth miner is not without controversy with some investors wary of the sector, a source said.

MP Materials was formed from the acquisition of the California’s mountain pass mine with the previous owner, Molycorp, filing for bankruptcy in 2015.

Super Micro surges

Super Micro’s recently priced 0% convertible notes due 2029 surged outright in heavy volume on Monday on news the company’s stock would be added to the S&P 500 index.

The 0% convertible notes added 12 points outright with stock up almost 20%.

The notes were trading at 114 versus a stock price of $1,079 early in the session, according to a market source.

They were changing hands at 116.5 versus a stock price of $1,131 in the late afternoon.

While the notes made large outright gains, they were largely moving in line dollar-neutral, a source said.

There was $50 million in reported volume.

Super Micro’s stock traded to a low of $1,020.34 and a high of $1,155 before closing at $1,074.34, an increase of 18.65%.

Merger’s end

JetBlue’s 0.5% convertible notes due 2026 were on the rise as Spirit Airlines’ 1% convertible notes due 2026 fell as the airlines officially called an end to their merger agreement.

JetBlue’s 0.5% convertible notes were lifted 2 points in heavy volume.

The notes were changing hands at 87.25 versus a stock price of $6.57 in the late afternoon, according to a market source.

There was $25 million in reported volume.

JetBlue’s stock traded to a low of $6.45 and a high of $6.80 before closing at $6.75, an increase of 4.33%.

Spirit Airlines’ 1% convertible notes due 2026 sank in light volume on the announcement.

The notes fell 6 points outright to trade at 41.75, a source said.

The yield was about 45.875%.

Spirit Airlines’ stock traded to a high of $5.98 and a low of $5.43 before closing at $5.76, off 10.84%.

The JetBlue/Spirit Airlines merger has long been considered a positive for Spirit and a negative for JetBlue with many saying JetBlue “dodged a bullet” when a federal judge struck down the merger due to antitrust concerns.

While Spirit Airlines’ convertible notes have seen intermittent rallies on optimism the court decision would be overturned on appeal, Spirit and JetBlue conceded that the appeal would most likely be unsuccessful as they announced the termination of their merger agreement.

Mentioned in this article:

Albemarle Corp. NYSE: ALB

iRhythm Technologies Inc. Nasdaq: IRTC

JetBlue Airways Corp. Nasdaq: JBLU

Kosmos Energy Ltd. NYSE: KOS

LivaNova plc Nasdaq: LIVN

MicroStrategy Inc. Nasdaq: MSTR

MP Materials Corp. Nasdaq: MP

Spirit Airlines, Inc. NYSE: SAVE

Super Micro Computer Inc. Nasdaq: SMCI

Tandem Diabetes Care Inc. Nasdaq: TNDM

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