AXA launches $750 million of exchangeable bonds; Atlassian improves; Citrix dominates

By Abigail W. Adams

Portland, Me., April 26 – In the heart of earnings season, the primary market in the convertibles space remained active with the launch of a $750 million offering.

AXA SA plans to price $750 million of three-year bonds mandatorily exchangeable for AXA Equitable Holdings, Inc. stock on May 9 with price talk for a coupon of 6.75% to 7.25% and an initial exchange premium of 17.5% to 22.5%, according to a market source.

The bonds are being offered concurrently with the initial public offering of AXA Equitable’s stock by AXA SA. The mandatory exchangeable is really just another form of equity, a market source said.

As the primary market prepares new paper, Atlassian Corp. plc’s 0.625% convertible notes due 2023 remained active on Thursday with the notes looking better to buy, a market source said.

While few bonds traded, JPMorgan Chase Financial Co. LLC’s 0.25% cash-settled equity-linked notes tied to Voya Financial Inc. stock also showed signs of improvement and crept closer to par.

The new notes from Atlassian and JPMorgan made their market debut on Wednesday.

However, Citrix Systems, Inc.’s 0.5% convertible notes due 2019 dominated the secondary market on Thursday with the notes climbing alongside the stock after the multinational software company beat analyst expectations by a wide margin in its first-quarter earnings.

Comstock Resources, Inc.’s 7.75% convertible notes due 2019 jumped more than 14 points on an outright basis after the company withdrew its tender offer for the convertible notes and announced a new refinancing plan.

AXA’s deal

AXA SA plans to price $750 million three-year bonds mandatorily exchangeable for AXA Equitable Holdings stock on May 9 concurrently with an initial public offering of AXA Equitable stock.

AXA Equitable Holdings also launched the IPO on Thursday, saying that AXA SA will sell 137.25 million shares of common stock with the price expected to be between $24.00 and $27.00, according to a company news release.

Price talk is for a coupon of 6.75% to 7.25% and an initial exchange premium of 17.5% to 22.5%, according to a market source.

The concurrent offerings are “really just two forms of equity,” a market source said. By pricing the mandatory exchangeables alongside the IPO, AXA is expanding its investor base, the source said.

Day two

While trading activity surrounding Atlassian’s 0.625% convertible notes due 2023 tempered on Thursday, the notes remained active with about $20 million bonds traded by late afternoon.

The notes were looking better to buy and were up about 0.5 point early in the session, a market source said.

The notes were seen trading at 99.6 versus an equity price of $56.06 at mid-afternoon.

The 0.625% convertible notes due 2023 made their market debut on Wednesday with a lackluster reception in the secondary space. The notes were seen trading at 98 late Wednesday afternoon.

While trading activity of JPMorgan’s latest 0.25% cash-settled equity-linked notes tied to Voya remained muted, the notes were also seen slightly improved on an outright basis.

The 0.25% notes were seen just south of par at 99.95 Thursday afternoon. The new 0.25% notes also had a lackluster secondary market debut on Wednesday.

While off to a strong start early in the session, the 0.25% notes were seen trading at 99.625 Wednesday afternoon.

Citrix dominates

Citrix Systems’ 0.5% convertible notes due 2019 were the major volume movers of Thursday’s session with more than $71 million bonds traded by late afternoon.

The notes accounted for more than 20% of the total trading volume.

They were seen trading at 142.375 versus an equity price of $102.00, gaining more than 6 points outright.

Citrix stock closed Thursday at $101.17, an increase of 4.75%. More than 5 million shares traded during Thursday’s session versus the 50-day average daily volume of 1.76 million shares.

Citrix reported non-GAAP earnings per share of $1.29 on revenue of $697 million for the first quarter, which beat analyst expectations of earnings per share of $1.05 on revenue of $675 million.

Comstock jumps

Comstock Resources’ 7.75% convertible notes due 2019 jumped 14 points outright on Thursday as company stock soared. The 7.75% convertible notes traded up to 96.75 versus an equity price of $7.08.

While not as active as the 7.75% convertible notes, Comstock’s 9.5% convertible notes due 2020 climbed 16 points outright to trade up to 97, according to Trace data.

The Frisco, Texas-based independent energy company’s stock closed Thursday at $7.00, an increase of 47.06%.

The 7.75% and 9.5% convertible notes have traded in the low to mid 80s for much of April, according to Trace data.

Comstock withdrew its tender offer for the convertible notes on Thursday due to unmet conditions, Prospect News reported.

Comstock also announced on Thursday that Dallas Cowboys Football Club Ltd. and Arkoma Drilling LP owner Jerry Jones may make a substantial investment in the company.

Comstock signed a letter of intent with Arkoma Drilling LP and Williston Drilling LP where Comstock will acquire oil and gas properties in North Dakota from Arkoma in exchange for 88.6 million newly issued shares of the company at $7.00 a share.

Upon completion of the transaction, Arkoma will own 84% of Comstock’s outstanding shares.

Comstock plans to retire the convertible notes following the completion of the acquisition of the North Dakota properties.

Mentioned in this article:

Citrix Systems, Inc. Nasdaq: CTXS

Comstock Resources, Inc. NYSE: CRK

Voya Financial Inc. NYSE: VOYA

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