Affirm, Bilibili, Camtek convertibles eyed; Arrival upsizes; 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 offering of five-year convertible notes after the market close on Thursday. The deal was in demand during bookbuilding with the offering upsizing.

Meanwhile, new paper from Stem, Inc. hit the aftermarket on Thursday.

The new paper dominated activity in the secondary space. While the notes fell flat on an outright basis, they saw a large dollar-neutral expansion.

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.

The Shanghai-based video sharing company has seen its ADRs battered over the past six months amid Beijing’s crackdown on the private sector.

However, while the company’s equity is down almost 35% over the past six months, it has skyrocketed more than 250% since the company priced the $500 million issue of the 1.375% notes in 2019.

While some sources were apprehensive of Bilibili’s latest offering given the uncertainty surrounding ADRs, the deal was heard to be doing well during bookbuilding with books closing in the early afternoon.

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.

The deal was also heard to be doing well during bookbuilding with books closing in the early afternoon.

It is expected to perform well in the aftermarket.

Arrival upsizes

Arrival’s offering of five-year convertible notes was also doing well during bookbuidling with the deal upsizing to $260 million from $200 million.

Price talk remained for a coupon of 3.25% to 3.75% and an initial conversion premium of 22.5% to 27.5%.

The deal from the Luxembourg-based electric vehicle manufacturer was in the market with assumptions of 850 bps over Libor and a 45% vol., according to a market source.

Using those assumptions, the deal looked 8 points cheap at the midpoint of talk.

The borrow on the stock is difficult, which accounted for some of the cheapness in the deal.

Stock was also taking a beating on the heels of the convertible notes and secondary offering.

Concurrently, the company is pricing a secondary offering of up to $338 million, or 25 million shares.

Stock closed Thursday at $9.91, a decrease of 7.64%. Stock has lost about 25% of its value since the concurrent offerings were announced on Tuesday.

While the deal from the highly speculative credit is risky, “where you have risk you reward,” a source said. “It could trade well.”

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 expands

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 99.75 versus a stock price of $21.73. However, they improved on an outright basis as the session progressed and were wrapped around par in the late afternoon.

The notes expanded about 2 points dollar-neutral, a source said.

Stem’s stock traded to a high of $22 and a low of $21.11 before closing the day at $21.45, a decrease of 2.81%.

Mentioned in this article:

Arrival SA Nasdaq: ARVL

Affirm Holdings Inc. Nasdaq: AFRM

Bilibili Inc. Nasdaq: BILI

Camtek Ltd. Nasdaq: CAMT

Stem, Inc. NYSE: STEM

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