Morning Commentary: Progenity, Shift4 convertibles on deck; LivePerson expands on debut

By Abigail W. Adams

Portland, Me., Dec. 2 – New paper remained in focus on Wednesday with one new deal hitting the aftermarket and two more set to price after the market close.

Following a two-day marketing period, Shift4 Payments Inc. plans to price $400 million of five-year convertible notes and Progenity Inc. plans to sell $75 million of five-year convertible notes after the market close on Wednesday.

LivePerson Inc. became the latest issuer to price with a 0% coupon, a growing trend in the convertibles universe.

The new paper saw a large dollar-neutral expansion on debut.

On deck

Two new deals are expected to price after the market close on Wednesday.

Shift4 Payments plans to sell $400 million of five-year convertible notes after the market close on Wednesday with price talk for a coupon of 0.25% to 0.75% and an initial conversion premium of 37.5% to 42.5%, according to a market source.

Underwriters were marketing the deal with assumptions of 400 basis points over Libor and a 42% vol., which looked 2.625 points cheap at the midpoint of talk.

The deal is pricing with a concurrent equity offering of 8 million shares.

Progenity plans to sell $75 million of five-year convertible notes after the market close on Wednesday with price talk for a coupon of 6.75% to 7.25% and an initial conversion premium of 10% to 15%, according to a market source.

The deal modeled up to 3 points cheap, a source said. However, there was no borrow on the stock.

“With no borrow, that’s kind of meaningless,” the source said.

The company only recently went public with its initial public offering in June.

The convertible notes are pricing concurrently with a secondary offering of $25 million in common stock.

The small deal was wall-crossed and is not expected to trade much in the aftermarket.

LivePerson expands

LivePerson priced $450 million of six-year convertible notes after the market close on Tuesday at par with a coupon of 0% and an initial conversion premium of 42.5%.

Pricing came at the rich end of initial talk for a coupon of 0% to 0.5% and richer than initial talk for a conversion premium of 35% to 40%.

The deal was in demand during bookbuilding with allocations expected to be tight.

The demand followed the notes into the secondary space.

They expanded upwards of 2.5 points dollar-neutral early in the session, a source said.

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