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Morning Commentary: Atlassian to price $750 million of convertibles; JPMorgan notes on tap
By Abigail W. Adams
Portland, Me., April 24 – The convertibles primary market plans to price $1.35 billion over two deals after the market close on Tuesday.
Atlassian Corp. plc plans to price $750 million of five-year convertible notes with talk for a coupon of 0.125% to 0.625% and an initial conversion premium of 42.5% to 47.5%, according to a market source.
The deal comes with a call spread.
The offering is being marketed with a credit spread of 130 basis points and a 39% vol., according to market sources. The deal looks rich, a market source said.
“The spread assumption looks way too tight,” a market source said. With a credit spread of 200 bps, fair value would model out to 98.875, the source said.
JPMorgan Chase Financial Co. LLC plans to price $600 million of cash-settled equity-linked notes tied to Voya Financial Inc. stock with price talk for a coupon of 0% to 0.25% and an initial conversion premium of 30% to 35%, according to a market source.
It is JPMorgan’s second offering of cash-settled equity-linked notes tied to Voya Financial and will be the fourth issuance of cash-settled equity-linked notes tied Voya in the market.
As JPMorgan prepares new notes, the existing 0.25% cash-settled notes due 2023 were active and slightly improved on an outright basis early in Tuesday’s session.
The 0.25% notes were trading just north of par after spending the past several weeks below par, according to Trace data. JPMorgan was the first to price cash-settled equity-linked notes tied to Voya but was soon followed by Deutsche Bank AG, London Branch and BofA Finance LLC.
Banks have been monetizing the Voya warrants distributed after ING Group’s divestment of the company, market sources said.
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