Convertibles secondary market quiet; General Cable up on buyout; FireEye breaks par

By Abigail W. Adams

Portland, Me., June 4 – The convertibles space was off to a crawl on Monday with the secondary market waiting to see what the week will bring for new deals, market sources said.

“People are waiting to see if it’s going to be more of a primary or a secondary week,” a market source said.

While new deal activity was expected to pick up during the week, no new deals were launched on Monday.

Trading activity was light in the secondary space with $234 million in trading volume by dollar amount on the tape by late afternoon.

General Cable Corp.’s 4.5% convertible notes due 2029 were among the most actively traded of the day with $11 million bonds on the tape by late afternoon.

The notes were making gains with the buyout of the company just days away.

FireEye Inc.’s recently priced 0.875% convertible notes due 2024 traded up to par during Monday’s session after previously trading in the 98 range.

Workday Inc.’s 0.25% convertible notes due 2022 saw another active day in the secondary space with the notes trading in the 108 range as stock seesawed between gains and losses.

Akamai Technologies Inc.’s recently priced 0.125% convertible notes due 2025 were also among the most actively traded of the day.

However, for a billion-dollar issuance, the notes are scarce in the secondary market, a source said.

General Cable in focus

General Cable’s 4.5% convertible notes reemerged as a volume leader on Monday as the company’s buyout by Prysmian Group is set to close in a matter of days.

The notes were up 1.5 points to trade up to 107.5, a market source said.

General Cable’s 4.5% convertible notes have made gains since early December when the Milan, Italy-based cable manufacturer Prysmian announced it would acquire the company in a $3 billion deal.

Prior to the announcement, the 4.5% convertible notes were trading below par in the 97 range.

The acquisition was recently approved by the Committee on Foreign Investments in the United States, which was the last of the regulatory approvals needed, according to a company news release.

The deal is set to close on June 6, according to the release.

“People didn’t think it would happen so quickly,” a market source said.

The make-whole table will determine the final value of the bonds, the source said.

FireEye breaks par

With FireEye stock up alongside the tech sector on Monday, the company’s recently priced 0.875% convertible notes broke par in active trading.

The notes traded north of par during Monday’s session and were seen trading at 99.875 versus a stock price of $17.10 mid-afternoon, market sources said.

FireEye stock closed Monday at $17.16, an increase of 2.14%.

They were seen up about 0.125 point on a dollar-neutral basis.

The notes have largely traded below par since hitting the market on May 22.

Proceeds from the 0.875% notes offering were used to repurchase $340.2 million of the Milpitas, Calif.-based cybersecurity company’s 1% convertible notes due 2035.

The notes appeared to be repurchased at 97, a market source previously said.

The convertible notes that did not get repurchased are now trading on an outright basis, a market source said.

The 1% convertible notes were last seen trading on Friday at 95.625, according to Trace data.

Workday active

Workday’s 0.25% convertible notes due 2022 were again a volume leader on Monday after an active day of trading on Friday.

The notes were seen trading at 108.75 versus a stock price of $126.74 with about $7 million on the tape by late afternoon, according to a market source.

Workday stock closed Monday at $128.20, an increase of 1.51%.

The notes have been active since Friday when the company’s stock slid after reporting its first-quarter earnings.

While Workday topped analyst expectations with non-GAAP earning per share of 33 cents, compared to the expected earnings per share of 26 cents, stock dropped as much as 4% in intraday trading on Friday.

Akamai scarce

While Akamai’s 0.125% convertible notes due 2025 were a volume leader on Monday, only $6 million of the bonds had traded by late afternoon.

The 0.125% notes were seen trading at 102.5 versus an equity price of $76.83. The notes were up about 0.75 point outright and were seen slightly improved dollar-neutral.

Akamai’s 0% convertible notes due 2019 were also active on Monday. They were seen trading at 101.5 versus a stock price of $76.97 with about $5 million prints on the tape.

As a $1.15 billion issue, Akamai’s 0.125% convertible notes issue was a significant deal for the convertibles space.

However, much like Western Digital Corp.’s 1.5% convertible notes due 2024, which was a $1.1 billion issue, Akamai’s 0.125% convertible notes are scarce in the secondary market, a source said.

The notes have not seen much trading action since the initial flurry of activity on their May 17 debut.

Western Digital’s 1.5% convertible notes were also a volume mover on Monday with more than $8 million of the bonds traded by late afternoon.

The notes were seen trading at 104.5 versus an equity price of $80.86.

Mentioned in this article:

Akamai Technologies Inc. Nasdaq: AKAM

FireEye Inc. Nasdaq: FEYE

General Cable Corp. NYSE: BGC

Western Digital Corp. Nasdaq: WDC

Workday Inc. Nasdaq: WDAY

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