Morning Commentary: Expedia offers convertible notes; MicroStrategy may tap market

By Rebecca Melvin

New York, Feb. 16 – The convertibles market started the holiday shortened week on Tuesday with two new deals in the offing, with one for Expedia Group Inc. and a second for MicroStrategy Inc.

U.S. financial markets were closed on Monday in observance of Presidents Day.

Expedia announced early Tuesday that it is planning to price $825 million of five-year convertible notes with a fixed 0% coupon and a 57.5% to 62.5% initial conversion premium, according to a company news release and market sources.

The notes are non-callable for three years and then callable with a make-whole payment at 130% of the conversion price thereafter.

There are no calls except as takeover protection, and there is standard dividend protection.

The Bellevue, Wash.-based online travel company is also pricing an offering of senior notes, and it has also issued a conditional notice of redemption for all of its outstanding 7% notes due 2025, of which there is $750 million outstanding. The notes will be redeemed at par on March 3.

Meanwhile, a market source noted that MicroStrategy is planning to offer $600 million of convertible senior notes due 2027 in a private offering, according to market sources.

Proceeds of the notes will be used to acquire additional Bitcoin.

Further details were not immediately available.

The company had issued $650 million of convertible debt in December with the proceeds used to purchase Bitcoin also.

The business intelligence and analytics company is based in Tysons Corner. Va.

The convertibles primary market was light last week, but it did enjoy an outsized $1 billion sale of five-year notes from Peloton Interactive Inc. last week. The 0% coupon paper surged in the aftermarket, changing hands at 108 versus a stock price of $146.25 on Thursday, according to Prospect News.

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