Morning Commentary: Affirm, Bilibili, Camtek convertibles eyed; Stem hits aftermarket

By Abigail W. Adams

Portland, Me., Nov. 18 – The convertibles primary market continued to churn out offerings at a rapid pace with four deals totaling $2.99 billion set to price after the market close and two deals totaling $600 million making their aftermarket debut.

Bilibili Inc. plans to price $1.4 billion of five-year convertible notes, Affirm Holdings Inc. plans to price $1.25 billion of five-year convertible notes and Camtek Ltd. plans to sell $140 million of five-year convertible notes after the market close.

The deals looked cheap based on underwriters’ assumptions.

Arrival SA is also scheduled to price its $200 million offering of five-year convertible notes after the market close on Thursday.

Meanwhile, new paper from Stem, Inc. and hit the aftermarket on Thursday. The new paper was trading below par with stock off early in the session.

Bilibili’s exchange

Bilibili plans to price $1.4 billion of five-year convertible notes after the market close on Thursday with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 40% to 45%.

The deal was in the market with assumptions of 425 basis points over Libor and a 42% vol., according to a market source.

The deal looked 1.75 points cheap based on underwriters’ assumptions, a source said.

Concurrently, the company is entering into privately negotiated transactions with holders of its 1.375% convertible notes due 2026 to exchange the notes for shares.

The 1.375% convertible notes are deep-in-the-money and trade at triple par. The cheapness of the new deal was most likely an effort to entice holders to switch to the new offering, which carried more of a bond floor, a source said.

Affirm eyed

Affirm Holdings plans to price $1.25 billion of five-year convertible notes after the market close on Thursday with price talk for a coupon of 0% to 0.25% and an initial conversion premium of 47.5% to 52.5%.

The deal was in the market with assumptions of 250 bps over Libor and a 45% vol., according to a market source.

Using those assumptions, the deal looked 1.18 points cheap at the midpoint of talk, a source said.

Camtek looks cheap

Camtek intends to sell $140 million of five-year convertible notes after the market close on Thursday with price talk for a fixed coupon of 0% and an initial conversion premium of 22.5% to 27.5%.

The deal was heard to be in the market with assumptions of 325 bps over Libor and a 40% vol., according to a market source.

Using those assumptions, the deal looked 4.22 points cheap at the midpoint of talk.

Stem below par

Stem priced an upsized $400 million of seven-year green convertible notes after the market close on Wednesday at par at the rich end of talk with a coupon of 0.5% and an initial conversion premium of 32.5%.

Price talk was for a coupon of 0.5% to 1% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

The greenshoe was also upsized to $60 million.

The initial size of the offering was $350 million with a greenshoe of $52.5 million.

The new paper was trading below par with stock off early in the session.

The notes were changing hands at 97.75 versus a stock price of $21.73.

Stem’s stock was $21.54, a decrease of 2.4%, shortly before 11 a.m. ET.

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