Five9, Progress Software up on trading debut; NextEra flat; MicroStrategy shoots higher

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 day for equities with the latest GDP print coming in slightly below expectations.

The Dow Jones industrial average closed Wednesday down 23 points, or 0.06%, the S&P 500 index closed down 0.17%, the Nasdaq Composite index closed down 0.55% and the Russell 2000 index closed down 0.77%.

There was $244 million in reported convertibles trading volume about one hour into the session and $1.03 billion on the tape about one hour before the market close with the new paper accounting for nearly one-half of the total activity in the space.

While Progress Software’s and Five9’s convertible notes saw a large dollar-neutral expansion, NextEra’s paper fell flat.

MicroStrategy Inc.’s convertible notes were again in focus as Bitcoin blasted toward a multi-year high with the all-time high set in November 2021 within reach.

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 its 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.

They were changing hands at 102.125 versus a stock price of $60.99 in the late afternoon.

The notes expanded 2.5 points dollar-neutral, sources said.

There was $150 million in reported volume.

Five9’s stock traded to a low of $59.39 and a high of $63 before closing at $60.66, a decrease of 0.70%.

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 traded at 103 versus a stock price of $52.86 in the late afternoon.

The notes expanded 1.5 points dollar-neutral, a source said.

There was $125 million in reported volume.

Progress Software’s stock traded to a low of $52.43 and a high of $54 before closing at $52.66, off 0.88%.

NextEra flat

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 on an outright basis but was trading flat on hedge.

The notes were trading at 100.25 early in the session.

They remained wrapped around 100.25 in the late afternoon with stock at $54.88.

There was $147 million in reported volume.

NextEra’s stock traded to a low of $54.71 and a high of $55.72 before closing at $55.04, down 0.94%.

MicroStrategy shoots higher

MicroStrategy’s convertible notes continued to shoot higher as stock surged with Bitcoin reapproaching its all-time high.

The 0% convertible notes due 2027 broke par for the first time since shortly after pricing in February 2021.

They rose 5 points outright with stock up more than 11%.

The 0% notes were trading at 100.625 versus a stock price of $970.98 in the late afternoon.

There was $18 million in reported volume.

MicroStrategy’s deep-in-the-money 0.75% convertible notes due 2025 were up 21 points outright.

They were trading at 244 versus a stock price of $964.55 in the late afternoon.

However, the 0.75% convertible notes are now largely a cash alternative trade, a source said.

There was $9 million in reported volume.

MicroStrategy’s stock traded to a high of $1,008.88 and a low of $915.50 before closing at $962.95, an increase of 10.46%.

Stock shot higher as Bitcoin hit a multi-year high and reapproached its all-time high of $68,997.76 set in November 2021.

Bitcoin traded to a high of $63,734 before pulling back to trade at $60,378.21, an increase of 6.27%, shortly after the close of U.S. equity markets.

Mentioned in this article:

Five9 Inc. Nasdaq: FIVN

MicroStrategy Inc. Nasdaq: MSTR

NextEra Energy Partners LP NYSE: NEP

Progress Software Corp. Nasdaq: PRGS

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