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Morning Commentary: Uber’s upsized convertible notes price, expand on trading debut
By Abigail W. Adams
Portland, Me., Nov. 21 – It was an active morning in the convertibles secondary space as $1.5 billion in new supply made its aftermarket debut.
In a deal that played to heavy demand, Uber Technologies Inc. priced an upsized $1.5 billion of five-year convertible notes after the market close on Monday at par with a coupon of 0.875% and an initial conversion premium of 32.5%.
Pricing came at the midpoint of revised talk for a coupon of 0.75% to 1% and in line with revised talk for an initial conversion premium of 32.5%.
Initial price talk was for a coupon of 0.75% to 1.25% and an initial conversion premium of 27.5% to 32.5%.
The greenshoe was also upsized to $225 million.
The initial size of the offering was $1.2 billion with a greenshoe of $180 million.
The new paper hit the secondary space on a red day for equities with the Dow Jones industrial average down 90 points, or 0.25%, the S&P 500 index down 0.38%, the Nasdaq Composite index down 0.82% and the Russell 2000 index down 0.96% shortly before 11 a.m. ET.
However, the demand seen during book building followed the notes into the secondary space, with the notes making strong gains on an outright and dollar-neutral basis on debut.
The 0.875% notes jumped to a 101 handle and were trading in the 101.375 to 101.625 context with stock off early in the session.
The convertibles expanded about 0.75 point dollar-neutral, a source said.
The notes dominated activity early in the session with $117 million in reported volume.
“This was a good showing,” a source said. “It was good for the market.”
Uber’s stock was changing hands at $54.54, a decrease of 0.38%, shortly before 11 a.m. ET.
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