Rexford exchangeable notes trade up outright; Cardlytics notes expand on debut

By Abigail W. Adams

Portland, Me., March 27 – New paper was in focus on Wednesday as $1.15 billion in new supply made its way into the convertibles secondary space.

Rexford Industrial Realty, LP priced its $1 billion two-tranche offering of exchangeable notes (Baa2/BBB+/BBB+) and Cardlytics Inc. priced $150 million of five-year convertible notes after the market close on Tuesday.

The new paper hit the secondary space on a mixed open but strong close for equities with the Dow Jones industrial average closing Wednesday up 478 points, or 1.22%, the S&P 500 index up 0.86%, the Nasdaq Composite index up 0.51% and the Russell 2000 index up 2.13%.

There was $879 million in reported volume about one hour before the market close with the new paper dominating activity.

While Rexford’s exchangeable notes made decent outright and dollar-neutral gains, Cardlytics’ new notes were the “winner,” a source said, with the notes jumping on an outright and dollar-neutral basis.

Rexford up in line

Rexford priced a $500 million tranche of three-year exchangeable notes and a $500 million tranche of five-year exchangeable notes after the market close on Tuesday.

The three-year notes priced with a coupon of 4.375% and an initial exchange premium of 30%.

Pricing came at the cheap end of talk for a coupon of 3.875% to 4.375% and an initial exchange premium of 30% to 35%.

The five-year tranche priced with a coupon of 4.125% and an initial exchange premium of 30%.

Pricing came at the midpoint of talk for a coupon of 3.875% to 4.375% and at the cheap end of talk for an initial exchange premium of 30% to 35%.

Both tranches were trading up on an outright basis. While flat at the open, they stood poised to close the day with decent dollar-neutral gains.

The 4.375% exchangeable notes due 2027 were changing hands at 100.875 early in the session.

They were trading at 100.625 versus a stock price of $15.71 in the late afternoon, according to a market source.

There was $95 million in reported volume.

The 4.125% exchangeable notes due 2029 were slightly outpacing their shorter-duration counterpart.

The notes were trading at 101.125 early in the session and were seen at 101.5 versus a stock price of $15.71 in the late afternoon.

There was $119 million in reported volume.

While both tranches were flat on hedge early in the session, sources saw them up about 0.5 point dollar-neutral in the late afternoon.

Rexford’s stock traded to a low of $48.99 and a high of $49.97 before closing at $49.88, up 2.78%.

Cardlytics a winner

Cardlytics priced $150 million of five-year convertible notes after the market close on Tuesday at par with a coupon of 4.25% and an initial conversion premium of 32.5%.

Pricing came at the midpoint of talk for a coupon of 4% to 4.5% and at the rich end of talk for an initial conversion premium of 27.5% to 32.5%.

The notes were the “winner of the day,” a source said.

They were making large gains on an outright and dollar-neutral basis.

The notes traded up to 104 with stock flat early in the session.

They were trading at 103.75 versus a stock price of $14.54 in the late afternoon.

The notes expanded 3 to 4 points dollar-neutral, sources said.

There was $39 million in reported volume.

Cardlytics’ stock traded to a low of $13.24 and a high of $14.90 before closing at $14.64, up 7.65%.

The small offering was coming as a refinancing with the company repurchasing $183.9 million in principal of the company’s outstanding 1% convertible notes due 2025 for approximately $169.3 million in cash in privately negotiated transactions.

The buyback price appeared to be at 92, a source said.

Cardlytics’ latest convertible notes were part opportunism with the company pushing through a refinancing after stock’s spectacular post-earnings surge in mid-March.

The data marketing firm’s 1% notes were trading in the mid- to high 60s in the run up to earnings.

They were catapulted to the mid-80s and expanded several points dollar-neutral as stock more than doubled.

The 1% notes were trading in the 89.75 to 90 context prior to the buyback.

Mentioned in this article:

Cardlytics Inc. Nasdaq: CDLX

Rexford Industrial Realty Inc. NYSE: REXR

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