Cardlytics, Marcus convertibles expand; Medallia drops below par; Western Digital active

By Abigail W. Adams

Portland, Me., Sept. 18 – The convertibles secondary space saw more new paper on Friday after two deals totaling $287 million cleared the primary market.

Cardlytics Inc. priced $200 million of five-year convertible notes and the Marcus Corp. priced $87 million of five-year convertible notes after the market close on Thursday.

The new paper was in focus in the secondary space with both deals trading up on an outright and dollar-neutral, or hedged, basis.

While volume was light, Medallia Inc.’s recently priced 0.125% convertible notes due 2025 dropped below par as stock continued to decline on Friday.

Outside of the new paper, Western Digital Corp.’s 1.5% convertible notes due 2024 were active although largely unchanged.

Overall volume was decent for a Friday with $529 million on the tape about one hour before the market close, a source said.

While equities extended their losses in volatile trading on Friday, the convertibles market was largely unchanged with most names moving in line, sources said.

Cardlytics trades up

Cardlytics priced $200 million of five-year convertible notes after the market close on Thursday at par with a coupon of 1% and an initial conversion premium of 32.5%.

Pricing came at the midpoint of talk for a coupon of 0.75% to 1.25% and at the rich end of talk for an initial conversion premium of 27.5% to 32.5%, according to a market source.

The 1% notes were in focus in the secondary space and were trading up on an outright and dollar-neutral basis.

The notes traded as high as 103.5 with the majority of trades between 102.5 to 103.5 with stock off early in the session, a source said.

It continued to trade around 103 in the afternoon.

The notes were expanded 1.5 to 2 points dollar-neutral, a source said.

The notes were the most actively traded in the secondary space on Friday with more than $41 million on the tape in the mid-afternoon.

Cardlytics stock traded to a low of $62.89 and a high of $65.60 before closing the day at $65.52, an increase of 1.97%.

Marcus prices

Marcus priced $87 million of five-year convertible notes after the market close on Thursday at par with a coupon of 5% and an initial conversion premium of 22.5%, according to a market source.

Pricing came at the rich end of talk for a coupon of 5% to 5.5% and at the midpoint of talk for an initial conversion premium of 20% to 25%.

The new paper skyrocketed on an outright and dollar-neutral basis.

The 5% notes traded up to 109 in the late afternoon.

They were expanded upwards of 5 points dollar-neutral, a source said.

Sources were surprised by the trading activity in the notes given the small size of the issue.

There was more than $23 million in reported volume by the late afternoon, according to a market source.

There was a good mix of outright and swap trades.

Marcus stock traded to a low of $8.95 and a high of $9.90 before closing the day at $9.85, an increase of 9.57%.

Medallia below par

Medallia’s recently priced 0.125% convertible notes due 2025 dropped below par on Friday as stock continued its downward momentum.

While volume was light, the notes were on a 99-handle in the late afternoon, a source said.

However, they maintained the large dollar-neutral expansion made since hitting the aftermarket on Wednesday.

Medallia stock traded to a low of $25.78 and a high of $26.94 before closing the day at $26.24, a decrease of 1.8%.

The notes have expanded more than 3 points dollar-neutral since hitting the aftermarket.

Western Digital active

Western Digital’s 1.5% convertible notes due 2024 were active on Friday although the notes were largely unchanged, sources said.

There were some large trades in the notes around 95.75 early in the session although there were some odd lot trades as high as 98.

There were some large sellers of the notes out of Europe, a source said.

The 1.5% notes are not equity sensitive.

Mentioned in this article:

Cardlytics Inc. Nasdaq: CDLX

Marcus Corp. NYSE: MCS

Medallia Inc. NYSE: MDLA

Western Digital Corp. Nasdaq: WDC

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