New Trip.com/Huazhu exchangeable moves in line; Atlantica prices $100 million green exchangeable

By Rebecca Melvin

New York, July 14 – Trip.com Group Ltd.’s newly priced notes that are exchangeable into shares of Huazhu Group Ltd. moved up in line with the shares on Tuesday after the company priced $500 million of the seven-year notes at the midpoint of coupon talk and at the cheap end of exchange premium talk.

The new Trip.com/Huazhu exchangeable, which priced with a 1.5% coupon and 20% premium, traded late in the session at 102.5 which was versus a share price of approximately $34.44. The stock was up 79 cents, or 2.5% on the day.

Convertible market players were also watching a planned five-year green exchangeable note to be priced by Atlantica Sustainable Infrastructure Jersey Ltd. on Tuesday. The deal priced after the market close.

The company priced $100 million of five-year green exchangeable senior notes with a 4% coupon and a 20% initial exchange premium, according to a company release.

Pricing came at the cheap end of talk, which was for a 3.5% to 4% coupon and a 20% to 25% exchange premium.

Norwegian Cruise Line Holdings Ltd. dropped in active trading. It was the second most traded convertible note on Tuesday, according to Trace data. The paper shed 4 points and was seen at about 127.75 at the end of the day. The shares of the cruise line company, which trade on the New York Stock Exchange, shed 27 cents or 1.7% to $15.33. The stock has been bumping along the bottom after falling out of bed early in the year. Prior to that drop the stock had been trading close to $60 per share. Norwegian Cruise Line sold $750 million of the 6% exchangeables due 2024 in early May.

The convertibles of Tesla Inc. were quieter on Tuesday after trading actively on Monday when the underlying shares hit an intraday high of $1,794.99. Tesla 1.25% convertibles due 2021 traded last at 414.67 on Tuesday but also changed hands at 431.145 earlier in the day, while Tesla shares closed at $1,516.80.

While Tesla quieted, two airline convertibles remained active on Tuesday after trading actively on Monday. Southwest Airlines Co.’s 1.25% convertibles due 2025 were mostly at about 119.6 after printing at 120, according to Trace data. The Southwest shares underlying the notes added 61 cents, or 1.9% to $33.25 on the day. Southwest priced the $2.3 billion convertible issue at the end of April when the stock reference price was $28.50.

American Airlines Group Inc.’s 6.5% convertible notes due 2025 ended the day down a point on an outright basis at 83.25.

Splunk Inc.’s sister convertibles were both in trade, with the Splunk 1.125% convertibles due 2027 edging lower by a point to 110.4, while the Splunk 1.125% convertibles due 2025 added more than half a point to 147.99. Splunk shares closed higher by $1.78, or 0.9%, to $199.78.

Trip.com/Huazhu moves up

The new Trip.com notes exchangeable into shares of Huazhu were heard in the premarket at 101 to 103. Later they traded in that range with Huazhu shares up fractionally in the morning session. The shares continued to push higher, ending the session up 79 cents, or 2.4%, at $34.42.

They were seen cheap ahead of pricing on Monday, but the credit was not attractive to at least one market source.

The new notes are non-callable, but there are bondholder puts on July 1, 2023 and July 1, 2025 at par plus accrued and unpaid interest.

J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC were bookrunners of the Regulation S notes.

Atlantica prices on the cheap

The Rule 144A Atlantica deal looked to be worth 103.09 at the midpoint of talk assuming a credit spread of 500 basis points over Libor and 28% vol., according to a market source.

The issuer is a wholly owned subsidiary of London-based Atlantica, which owns a diversified portfolio of contracted renewable energy, efficient natural gas, electric transmission and water assets in North and South America and certain emerging Middle East and Africa markets.

The Rule 144A deal has a 15% greenshoe.

J.P. Morgan Securities LLC (green bond structuring agent), RBC Capital Markets Corp. and BMO Capital Markets Corp. were joint bookrunning managers of the deal.

The notes are not callable and have a change of control put.

The company plans to use the proceeds to refinance debt or finance the acquisition of new or ongoing assets or projects which meet eligibility criteria under Atlantica’s green finance framework.

Mentioned in this article:

American Airlines Group Inc. Nasdaq: AAL

Atlantica Sustainable Infrastructure plc Nasdaq: AY

Huazhu Group Ltd. ADS: Nasdaq: HTHT

Norwegian Cruise Line Holdings Ltd. NYSE: NCLH

Southwest Airlines Co. NYSE: LUV

Splunk Inc. Nasdaq: SPLK

Tesla Inc. Nasdaq:TSLA

Trip.com Group Ltd. Nasdaq: TCOM

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