Five9, Progress Software, NextEra convertibles eyed; Global Payments, Super Micro active

By Abigail W. Adams

Portland, Me., Feb. 27 – The convertibles primary market continued to unleash offerings on Tuesday with three deals totaling $1.85 billion set to price after the market close.

Five9 Inc. is on deck with a $600 million offering of five-year convertible notes, Progress Software Corp. with a $350 million offering of six-year convertible notes and NextEra Energy Capital Holdings Inc. with a $900 million offering of three-year exchangeable notes (expected Baa1/BBB+/A-).

“The pipeline is open,” a source said.

The deals looked cheap based on underwriters’ assumptions and were heard to be doing well with the credits solid and demand for new paper strong.

Meanwhile, the secondary space was slightly softer on Tuesday in anticipation of the influx of new paper with equities mixed.

The Dow Jones industrial average closed Tuesday down 97 points, or 0.25%, the S&P 500 index closed up 0.17%, the Nasdaq Composite index closed up 0.37% and the Russell 2000 index closed up 1.34%.

There was $95 million in reported volume about one hour into the session and $517 million on the tape in the late afternoon with the issues that priced the previous week continuing to drive trading activity.

Global Payments Inc.’s 1.5% convertible notes due 2031 (Baa3/BBB-) were the most actively traded notes of Tuesday’s session with the paper unchanged dollar-neutral.

Super Micro Computer Inc.’s 0% convertible notes due 2029 remained active with the notes also moving largely in line with stock.

Five9 refinances

Five9 plans to price $600 million of five-year convertible notes after the market close on Tuesday with price talk for a coupon of 1% to 1.5% and an initial conversion premium of 27.5% to 32.5%.

The deal was heard to be in the market with assumptions of 300 basis points over SOFR and a 40% vol.

Using those assumptions, the deal looked about 2.8 points to 3.3 points cheap at the midpoint of talk, source said.

However, some sources felt underwriters were being conservative with the assumptions and pegged them as a credit spread of 250 bps over SOFR and a 42% vol.

Using assumptions of 250 bps over SOFR and a 42% vol., the deal looked about 5.5 points cheap, a source said.

The offering is coming as a refinancing with proceeds to be used to fund the repurchase of a portion of the company’s 0.5% convertible notes due 2025.

Progress Software eyed

Progress Software plans to sell $350 million of six-year convertible notes after the market close on Tuesday with price talk for a coupon of 3.5% to 4% and an initial conversion premium of 25% to 30%

The deal was heard to be in the market with assumptions of 325 bps over SOFR and a 25% vol.

Using those assumptions, the deal looked about 2.625 points to 3 points cheap at the midpoint of talk, sources said.

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

The vol. assumptions were much more conservative than the vol. assumptions used to market Progress Software’s 1% convertible notes due 2026 and much more appropriate.

The 1% convertible notes were marketed with a higher vol. when they priced in 2021 and “bled” in the secondary.

The deal is also a refinancing with the company tapping the convertibles market to repay the outstanding amounts under its term loan.

Progress Software’s 1% convertible notes due 2026 were active on the heels of the new offering with the notes lower alongside stock.

The notes fell about 2 points outright with stock off 4%.

The notes were trading at 104.375 versus a stock price of $53.85 in the late afternoon.

However, they were moving in line dollar-neutral, a source said.

There was $13 million in reported volume.

Progress Software’s stock traded to a low of $53.07 and a high of $54.69 before closing at $53.13, a decrease of 5.24%.

NextEra on deck

NextEra plans to sell $900 million of three-year exchangeable notes (expected Baa1/BBB+/A-) after the market close on Tuesday with price talk for a coupon of 2.75% to 3.25% and an initial exchange premium of 22.5% to 27.5%.

The deal was heard to be in the market with assumptions of 85 bps over SOFR and a 25% vol.

Using those assumptions, the deal looked about 1.625 points to 2 points cheap at the midpoint of talk, sources said.

While there was little doubt about the deal getting done, the offering from the serial issuer was more high-grade paper from an energy company and did not elicit much enthusiasm.

In line

The new paper to price in the onslaught of issuance the previous week continued to see heavy volume in the secondary space.

Global Payments’ 1.5% convertible notes due 2031 were the most actively traded issue of the session with the notes lower alongside stock.

The 1.5% notes were changing hands at 103 versus a stock price of $132.78 in the late afternoon, according to a market source.

There was $55 million in reported volume.

Global Payments’ stock traded to a low of $132.28 and a high of $133.73 before closing at $133.23, a decrease of 0.075%.

Super Micro’s 0% convertible notes due 2029 were also lower alongside stock but moving largely in line dollar-neutral.

The notes were down 1 point with stock off almost 3%.

The convertibles were trading at 101.875 versus a stock price of $843.64 in the late afternoon.

There was $27 million in reported volume.

Super Micro’s stock traded to a low of $814 and a high of $869 before closing at $851.11, down 2.88%.

Mentioned in this article:

Five9 Inc. Nasdaq: FIVN

Global Payments Inc. NYSE: GPN

NextEra Energy Partners LP NYSE: NEP

Progress Software Corp. Nasdaq: PRGS

Super Micro Computer Inc. Nasdaq: SMCI

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