Seagate, Advanced Energy, Corporate Office Properties, Vishay on deck; Liberty Media, CSG eyed

By Abigail W. Adams

Portland, Me., Sept. 6 – The convertibles primary market continued to unleash the floodgates with four new deals on deck on Thursday, two deals slated to price post-close on Wednesday and one more new deal making its aftermarket debut.

Seagate HDD Cayman plans to price $1.3 billion of five-year notes exchangeable for Seagate Technology Holdings plc, Advanced Energy Industries Inc. plans to price $500 million of five-year convertible notes, Vishay Intertechnology Inc. plans to sell $600 million of seven-year convertible notes, and Corporate Office Properties Trust plans to price $300 million of five-year exchangeable notes after the market close on Thursday.

Liberty Media Corp. plans to price $900 million of exchangeable senior debentures due 2053 for Live Nation Entertainment Inc. stock and CSG Systems International Inc. plans to sell $350 million of five-year convertible notes after the market close on Wednesday.

Both offerings modeled cheap although sources saw CSG as the more attractive offering.

While market players eyed the new deals in the works, new paper from Rapid7 Inc. made its aftermarket debut.

The new paper hit the secondary space as equity markets continued to give back their gains from the previous week.

The Dow Jones industrial average closed Wednesday down 199 points, or 0.57%, the S&P 500 index closed down 0.70%, the Nasdaq Composite index closed down 1.06% and the Russell 2000 index closed down 0.33%.

The new paper from Rapid7 remained above water on Wednesday although it closed off the highs of the day.

Launch

The convertibles primary market continued to unleash the flood gates with four deals launching post-close.

Seagate HDD Cayman plans to price $1.3 billion of five-year notes exchangeable for Seagate Technology Holdings plc shares after the market close on Thursday with price talk for a coupon of 3.25% to 3.75% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

Morgan Stanley & Co. LLC is lead left bookrunner for the Rule 144A offering, which carries a greenshoe of $200 million.

Advanced Energy Industries plans to price $500 million of five-year convertible notes after the market close on Thursday with price talk for a coupon of 2.25% to 2.75% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

Citigroup Global Markets Inc., BofA Securities Inc. and Wells Fargo Securities LLC are bookrunners for the Rule 144A offering, which carries a greenshoe of $75 million.

Vishay Intertechnology plans to sell $600 million of seven-year convertible notes after the market close on Thursday with price talk for a fixed coupon of 2.25% and an initial conversion premium of 20% to 25%, according to a market source.

J.P. Morgan Securities LLC is sole bookrunner for the Rule 144A offering, which carries a greenshoe of $90 million.

Corporate Office Properties Trust plans to price $300 million of five-year exchangeable notes after the market close on Thursday with price talk for a coupon of 4.75% to 5.25% and an initial exchange premium of 22.5% to 27.5%, according to a market source.

Wells Fargo Securities is sole bookrunner for the Rule 144A offering, which carries a greenshoe of $45 million.

CSG eyed

CSG Systems intends to sell $350 million of five-year convertible notes after the market close on Wednesday with price talk for a coupon of 3.875% to 4.375% and an initial conversion premium of 27.5% to 32.5%.

The deal was heard to be in the market with assumptions of 300 basis points over SOFR and a 28% vol., according to a market source.

Using those assumptions, the deal looked about 3.1 points cheap at the midpoint of talk.

The deal looked attractive with a nice coupon, a good borrow on the company’s stock and a decent name, a source said.

The deal was heard to have played to strong demand with books closing in the early afternoon and pricing heard to be coming on the rich end of talk.

While most recent deals to clear the primary have come as refinancings, CSG’s deal is new money contributing to the net expansion of the convertibles market.

The fintech is not new to the convertibles market but has not priced a deal since 2016, according to the Prospect News database.

Liberty Media ahead

Liberty Media plans to price $900 million of exchangeable senior debentures due 2053 for Live Nation Entertainment stock after the market close on Wednesday with price talk for a coupon of 2% to 2.5% and an initial exchange premium of 30% to 35%.

The deal was heard to be in the market with assumptions of 300 bps over SOFR and a 33% vol.

Using those assumptions, the deal looked about 2.2 points cheap at the midpoint of talk, a source said.

The latest ‘John Malone special,’ a moniker market participants have given to the serial convertible issuance from Liberty Media, is coming as a refinancing.

Proceeds, together with cash on hand, will be used to make repurchases of Liberty Media’s 0.5% exchangeable debentures due 2050 in privately negotiated transactions or to settle exchanges or redeem the notes, which become freely callable and are putable on Sept. 1, 2024.

While there was little doubt about the deal’s ability to get done with the refinancing helping to drive demand, the offering was met with limited enthusiasm due to the amount of Liberty Media and Live Nation paper already available.

“It’s not the most exciting name,” a source said.

Rapid7 makes nominal gains

Rapid7 priced an upsized $270 million offering of convertible notes due March 15, 2029 after the market close on Tuesday at par at the rich end of talk with a coupon of 1.25% and an initial conversion premium of 32.5%.

Price talk was for a coupon of 1.25% to 1.75% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

The greenshoe was also upsized to $40 million.

The initial size of the offering was $250 million with a greenshoe of $37.5 million.

The deal played to strong demand with the offering modeling cheap and the deal coming as a refinancing.

Proceeds were used to repurchase $184 million in principal of the company’s 2.25% convertible notes due 2025 for $201.5 million.

The buyback price of the 2.25% convertible notes was 108.6944, a source said.

While holders of Rapid7’s outstanding notes made out on the buyback, Rapid7’s new notes made nominal gains on their aftermarket debut with the pricing taking a lot of the juice out of the deal.

“They didn’t leave too much on the table” with the upsizing and tight pricing, a source said.

The 1.25% notes were marked at 100.5 bid, 101 offered early in the session.

However, they came in as the session progressed and were marked at 100.25 bid, 100.5 offered, a source said.

While the notes expanded as much as 0.5 point dollar-neutral early in the session, they gave back some early gains and stood poised to close the day flat to expanded about 0.25 point on hedge.

The new paper dominated activity in the secondary space, accounting for $120 million of the $500 million in reported volume about one hour before the market close.

Rapid7’s stock traded to a low of $48.91 and a high of $49.90 before closing at $49, up 0.12%.

Mentioned in this article:

Seagate Technology Holdings plc Nasdaq: STX

Advanced Energy Industries Inc. Nasdaq: AEIS

Corporate Office Properties Trust NYSE: OFC

CSG Systems International Inc. Nasdaq: CSGS

Live Nation Entertainment NYSE: LYV

Rapid7 Inc. Nasdaq: RPD

Vishay Intertechnology Inc. NYSE: VSH

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