Morning Commentary: MongoDB, Luckin convertibles hit aftermarket, expand on debut

By Abigail W Adams

Portland, Me., Jan. 10 – Friday opened with $1.4 billion in new paper entering the convertibles universe.

In a deal that was in demand during bookbuilding, MongoDB Inc. priced an upsized $1 billion six-year convertible notes after the market close on Thursday with a coupon of 0.25% and an initial conversion premium of 42.5%.

Pricing came in line with revised talk for a coupon of 0.25% and at the rich end of talk for an initial conversion premium of 40% to 42.5%, according to a market source.

Initial price talk was for a coupon of 0% to 0.5% and an initial conversion premium of 37.5% to 42.5%.

The new paper was in focus in the secondary space and saw a large dollar-neutral expansion, sources said.

The 0.25% notes were up 2 points on a dollar-neutral, or hedged, basis, a market source said.

MongoDB stock was $149.4097, a decrease of 0.37%, shortly before 11 a.m. ET.

Approximately $479.2 million of the proceeds from the new offering will be used to repurchase for cash about $210 million of the company’s outstanding 0.75% convertible notes due 2024 in privately negotiated transactions.

Luckin Coffee Inc. priced $400 million five-year convertible notes after the market close on Thursday at the midpoint of talk with a coupon of 0.75% and an initial conversion premium of 30%.

Price talk was for a coupon of 0.5% to 1% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

The notes priced concurrently with an upsized secondary offering of 9 million American Depositary Shares, which priced at $42.00 a share.

The initial size of the offering was 7.2 million ADS.

Shareholder Centurium Capital also sold 4.8 million ADS for a total secondary offering of 13.8 million shares.

The 0.75% notes also saw a large dollar-neutral expansion with the notes gaining 2 points, a market source said.

Luckin’s ADSs were changing hands at $43.08, a decrease of 2.91%, shortly before 11 a.m. ET.

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