Radius hits aftermarket, flat on debut; Sea, BeautyHealth, BigCommerce notes eyed

By Abigail W. Adams

Portland, Me., Sept. 9 – The convertibles primary market opened the floodgates after a more than two-week hiatus with one new offering pricing and three deals totaling $3.2 billion set to price after the market close.

Radius Global Infrastructure Inc. priced an upsized $230 million of five-year convertible notes after the market close on Wednesday.

The new paper fell flat in the aftermarket with accounts more interested in the deals that were in the works, sources said.

Beauty Health Co. (BeautyHealth) plans to price $400 million of five-year convertible notes, BigCommerce Holdings Inc. plans to sell $300 million of five-year convertible notes, and Sea Ltd. plans to price $2.5 billion of five-year convertible notes after the market close on Thursday.

The deals looked cheap based on underwriters’ assumptions and were in demand during bookbuilding with BeautyHealth and Sea heard to be coming on the rich or through the rich end of talk.

In addition, Western Asset Mortgage Capital Corp. plans to price an offering of three-year convertible notes prior to the market open on Friday with price talk for a fixed coupon of 6.75% and a fixed initial conversion premium of 10%, according to a market source.

JMP Securities LLC is underwriter for the registered offering with the offering size to be determined.

Proceeds will be used to repurchase the company’s 6.75% convertible notes due 2022.

Radius flat

Radius priced an upsized $230 million of five-year convertible notes after the market close on Wednesday at the cheap end of talk with a coupon of 2.5% and an initial conversion premium of 30%.

Price talk was for a coupon of 2% to 2.5% and an initial conversion premium of 30% to 35%, according to a market source.

The greenshoe was also upsized to $34.5 million.

The initial size of the offering was $200 million with a greenshoe of $30 million.

The new paper fell flat in the aftermarket.

They traded as low as 99.125 soon after the opening bell.

“There was some puking going on,” a source said.

While they improved to 100.25 bid, 100.75 shortly before 11 a.m. ET, the notes dropped back down to par in the late afternoon.

They were marked at 99.5 bid, 100.25 offered heading into the market close.

The notes expanded about 0.25 point dollar-neutral, a source said.

There was about $37 million of the bonds on the tape.

While there were buyers for the notes below par, interest weakened with the notes above par, a source said.

Some accounts did not find the notes appealing because the company went public through a SPAC. Others found the terms aggressive for the credit.

Radius’ stock traded to a high of $17.54 and a low of $17.01 before closing the day at $17.41, an increase of 0.057%.

BeautyHealth looks cheap

BeautyHealth plans to price $400 million of five-year convertible notes after the market close on Thursday with price talk for a yield 1.5% to 2% with an initial conversion premium of 27.5% to 32.5%.

The deal was heard to be in the market with assumptions of 500 basis points over Libor and a 40% vol., a source said.

Using those assumptions, the deal looked 5.55 points cheap at the midpoint of talk.

The deal looked attractive and books closed early with pricing heard to be coming on the rich end of talk.

However, the company is young and has yet to release a quarterly financial report, a source said.

BeautyHealth went public in May through a merger with special purpose acquisition vehicle Vesper Healthcare Acquisition Corp.

There were no financials in their presentation to investors and stock is trading at 15x the anticipated sales, a source said.

BigCommerce eyed

BigCommerce plans to price $300 million of five-year convertible notes after the market close on Thursday with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 32.5% to 37.5%.

The deal was heard to be in the market with assumptions of 375 bps over Libor and a 40% vol., a source said.

Using those assumptions, the deal looked 1.34 points cheap at the midpoint of talk.

While some sources felt the deal was reasonably priced, BigCommerce is also a relatively young company.

The company went public in August 2020.

Sea megadeal in demand

Sea plans to sell $2.5 billion of five-year convertible notes after the market close on Thursday with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 50% to 55%.

The deal was heard to be in the market with assumptions of 200 bps over Libor and a 40% vol., according to a market source.

Using those assumptions, the deal looked 1.66 points cheap at the midpoint of talk, a source said.

The deal was in demand during bookbuilding and was heard to be pricing at the rich or through the rich end of talk, a source said.

While it is unclear if the convertible notes will be rated, Sea is an investment-grade company.

The offering is also registered, which increases its liquidity and attractiveness, a source said.

While the deal was in demand, the low to no coupon and high premium was a turn off for some sources.

“SE is partying like last January,” a source said. “I can’t go for that.”

Mentioned in this article:

Beauty Health Co. Nasdaq: SKIN

BigCommerce Holdings Inc. Nasdaq: BIGC

Radius Global Infrastructure Inc. Nasdaq: RADI

Sea Ltd. NYSE: SE

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