Morning Commentary: NextEra, Five9, Progress Software up; primary prices $1.95 billion

By Abigail W. Adams

Portland, Me., Feb. 28 – The convertibles secondary space was hopping early Wednesday as $1.95 billion in new supply made its aftermarket debut.

Five9 Inc. priced an upsized $650 million of five-year convertible notes, Progress Software Corp. priced an upsized $400 million of six-year convertible notes, and NextEra Energy Capital Holdings Inc. sold $900 million of three-year exchangeable notes (expected Baa1/BBB+/A-) after the market close on Tuesday.

The new paper hit the secondary space on a red open for equities with the latest GDP print coming in slightly below expectations.

The Dow Jones industrial average was down 88 points, or 0.23%, the S&P 500 index was down 0.17%, the Nasdaq Composite index was down 0.49% and the Russell 2000 index was down 0.30% shortly before 11 a.m. ET.

There was $244 million in reported convertibles trading volume about one hour into the session with the new paper accounting for $170 million of the total activity.

The new paper was putting in a strong performance in the aftermarket with new notes from Progress Software and Five9 seeing a large dollar-neutral expansion.

Five9 in demand

Five9 priced an upsized $650 million of five-year convertible notes after the market close on Tuesday at par with a coupon of 1% and an initial conversion premium of 30%.

Pricing came at the rich end of talk for a coupon of 1% to 1.5% and at the midpoint of talk for an initial conversion premium of 27.5% to 32.5%.

The new paper was strong on debut and made large gains on an outright and dollar-neutral basis.

The new 1% convertible notes were trading in the 102.5 to 103 context on an outright basis with stock off early in the session.

The notes expanded about 2.5 points dollar-neutral, a source said.

Five9’s stock was changing hands at $60.83, a decrease of 0.49%, shortly before 11 a.m. ET.

The offering came as a refinancing with the company repurchasing $313.1 million of its outstanding 0.5% convertible notes due 2025 for $304.9 million in cash.

The repurchase price appeared to be 97.25 with the company paying up about 2.5 points for the notes, a source said.

Progress Software expands

Progress Software priced an upsized $400 million of six-year convertible notes after the market close on Tuesday at par with a coupon of 3.5% and an initial conversion premium of 27.5%.

Pricing came at the rich end of talk for a coupon of 3.5% to 4% and at the midpoint of talk for an initial conversion premium of 25% to 30%.

The new notes made strong outright and dollar-neutral gains on debut.

They were changing hands at 102.75 with stock up early in the session.

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

Progress Software’s stock was trading at $53.57, an increase of 0.83%, shortly before 11 a.m. ET.

NextEra above par

NextEra Energy priced $900 million of three-year exchangeable notes (expected Baa1/BBB+/A-) after the market close on Tuesday at par with a coupon of 3% and an initial exchange premium of 22.5%.

Pricing came at the midpoint of talk for a coupon of 2.75% to 3.25% and at the cheap end of talk for an initial exchange premium of 22.5% to 27.5%.

The offering was more “boring” high-grade issuance from a utility company, sources said.

“The IG utility march continues,” a source said.

The new paper was holding above par with stock flat to off slightly early in the session.

The notes were trading at 100.25 early in the session.

NextEra’s stock was seen at $55.21, a decrease of 0.61%, shortly before 11 a.m. ET.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.