Accolade convertibles eyed; MP Materials off outright, up dollar-neutral; ViacomCBS sinks

By Abigail W. Adams

Portland, Me., March 24 – While the new deal frenzy in the convertibles market calmed on Wednesday after the multi-billion-dollar influx of deals the previous session, the new supply continued at a steady pace.

One $250 million offering is on deck for after the market close and $1.6 billion in two deals made their aftermarket debut on Wednesday.

Accolade Inc. plans to sell $250 million of five-year convertible notes after the market close.

MP Materials Corp. priced an upsized $600 million of five-year green convertible notes, and ViacomCBS Inc. priced $1 billion of $100-par three-year series A mandatory convertible preferred stock.

The new deals hit the secondary space on another volatile day for equities.

While equities launched the day in positive territory, they closed the day in the red with the Nasdaq composite down another 2.01%, the S&P 500 down 0.55% and the Russell 2000 down 1.91%.

While MP Materials’ notes dropped below par on an outright basis, they expanded dollar-neutral.

However, ViacomCBS’ mandatories tanked on an outright basis on their aftermarket debut.

While the mandatories were contracted dollar-neutral based on the concurrent secondary offering, hedge players that bought stock based on Tuesday’s closing price made out on the deal.

Accolade on tap

Accolade plans to sell $250 million of five-year convertible notes after the market close on Wednesday with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 30% to 35%.

The deal was heard to be marketed with assumptions of 450 basis points over Libor and a 42% vol., according to a market source.

Using those assumptions, the deal looked 1.29 points cheap at the midpoint of talk.

The deal was heard to be pricing on the cheap end of coupon talk and the midpoint of premium talk

MP Materials active

MP Materials priced an upsized $600 million of five-year green convertible notes after the market close on Tuesday at par with a coupon of 0.25% and an initial conversion premium of 26.5%, according to a company news release.

Pricing came at the cheap end of talk for a coupon of 0% to 0.25% and toward the cheap end of talk for an initial conversion premium of 25% to 30%, according to a market source.

Concurrently, certain shareholders sold 6 million shares of common stock at a public offering price of $35.00 per share.

The new paper was flat on an outright basis but was expanding dollar-neutral as stock continued its descent early in the session.

The notes were wrapped around par with stock off more than 6% in early trading.

However, they dropped below par as the market cracked in the afternoon.

The notes were trading at a session low of 98 bid, 99 offered about one hour before the closing bell.

However, they remained expanded about 1 point dollar-neutral.

The notes were the most actively traded convertible bond during Wednesday’s session with more than $85 million on the tape.

MP Materials’ stock traded to a high of $35.77 and a low of $32.86 before closing the day at $33.44, a decrease of 9.69%.

ViacomCBS tanks

ViacomCBS priced $1 billion of $100-par three-year series A mandatory convertible preferred stock after the market close on Tuesday at par with a dividend of 5.75% and a threshold appreciation premium of 17.5%, according to an FWP filing with the Securities and Exchange Commission.

Pricing came at the cheap end of talk for a dividend of 5.25% to 5.75% and a threshold appreciation premium of 17.5% to 22.5%.

Concurrently, the company priced a secondary offering of 20 million shares of its class B common stock at a public offering price of $85.00.

The mandatory preferred stock plunged on debut.

They opened the day at $96 and were trading as low as $91 early in the session.

The preferred stock’s downward spiral continued into the afternoon.

They were marked at $86.25 bid in the late afternoon and closed the day at $85 bid, $85.75 offered, sources said.

The preferred stock was contracted upwards of 2.5 points dollar-neutral based off of the concurrent equity offering.

However, players who hedged the mandatories based off of Tuesday’s closing price for stock saw a large dollar-neutral expansion.

The mandatory preferred stock expanded 1.5 to 2 points dollar-neutral on bid, a source said.

“Hedge guys did well,” the source said.

ViacomCBS’ common stock continued to tank with stock down as much as 40% over the past two days.

Stock traded to a high of $85 and a low of $70 before closing the day at $70.10, a decrease of 23.18%.

While the company’s stock was suffering from eye-popping losses, it had experienced a significant run since January, a source said.

ViacomCBS’ stock was trading at $36.00 a share in January. It hit $100.00 on Monday, the day before the mandatory and secondary offering was announced.

Mentioned in this article:

Accolade Inc. Nasdaq: ACCD

MP Materials Corp. Nasdaq: MP

ViacomCBS Inc. Nasdaq: VIAC

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