Realogy convertibles in focus, gain outright, dollar-neutral; Beyond Meat pops above par

By Abigail W. Adams

Portland, Me., May 28 – The last new convertible bond deal of the month hit the aftermarket on Friday.

Realogy Holdings Corp. priced an upsized $350 million of five-year exchangeable notes after the market close on Thursday.

The deal dominated the tape on Friday accounting for almost 20% of the total trading volume in the space.

The notes were making gains on an outright and dollar-neutral basis.

Realogy’s deal brought the weekly tally to $825 million, which priced over three deals.

The convertibles primary market continued to slow down on the new issue front with equity markets choppy and several deals that priced during the first quarter performing poorly in the aftermarket.

There were 14 deals totaling $6.04 billion that priced in May, bringing the year-to-date tally to $54.09 billion, which priced over 102 deals, according to Prospect News data.

New deal volume was $54.89 billion pricing in 97 deals at this time last year.

While Realogy dominated the tape on Friday, Beyond Meat Inc.’s 0% convertible notes due 2027 remained active with the notes popping above par for the first time since shortly after pricing.

Realogy in focus

Realogy priced an upsized $350 million of five-year exchangeable notes after the market close on Thursday at the rich end of talk with a coupon of 0.25% and an initial exchange premium of 40%.

Price talk was for a coupon of 0.25% to 0.75% and an initial exchange premium of 35% to 40%.

The notes will be issued by Realogy Group LLC and exchangeable for Realogy Holdings shares.

The greenshoe was also upsized to $52.5 million.

The initial size of the offering was $300 million with a greenshoe of $45 million.

The new paper dominated activity in the secondary space, accounting for nearly 20% of the total volume during Friday’s session.

More the $135 million of the bonds were on the tape by the late afternoon; total reported volume was $531 million.

The 0.25% notes traded as low as 100.375 and as high as 102.25 during the session.

The issue was changing hands at 101.75 about one hour after the opening bell, a source said.

They were trading at 101.125 versus a stock price of $17.61 in the late afternoon.

The notes expanded 1.5 points to 2 points on a dollar-neutral, or hedged, basis, a source said.

Realogy’s stock traded as low as $17.25 before turning positive and trading as high as $17.80.

Stock closed the day at $17.71, an increase of 1.26%.

Beyond Meat tops par

Beyond Meat’s 0% convertible notes due 2027 remained active in the secondary space on Friday with the notes popping above par for the first time since shortly after pricing.

The 0% notes were changing hands at 100.375 versus a stock price of $146.30 in the late afternoon, according to a market source.

There was more than $20 million in reported volume during the session.

Beyond Meat’s stock traded as high as $154.40 and as low as $143 before closing the day at $145.42, an increase of 1.97%.

While the stock gave up much of its early gains as Friday’s session progressed, its Reddit-fueled surge continued on Friday.

Beyond Meat’s stock has gained 36.5% in the past week, with one-third of those gains occurring on Thursday.

The surge in stock has been attributed to Reddit traders targeting the stock for a potential short squeeze – an interest that was initiated by CNBC’s Jim Cramer, who suggested it on his show Wednesday night.

Like several other 0% coupon bonds, Beyond Meat’s convertible notes have struggled since the sell-off in growth stocks in mid-March.

The 0% notes came under further outright pressure in early May after Beyond Meat reported a large earnings miss.

Stock has traded below $110 since the plant-based food company’s earnings report on May 10.

Mentioned in this article:

Realogy Holdings Corp. NYSE: RLGY

Beyond Meat Inc. Nasdaq: BYND

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