Nutanix, Patrick Industries expand on debut; Exact Sciences rebounds; Coupa gains

By Abigail W. Adams

Portland, Me., Jan. 18 – New convertible bonds from Nutanix Inc. and Patrick Industries Inc. hit the market on Thursday with both notes expanding on their debut, according to market sources.

“There was definitely massive demand” for Nutanix, which was highly oversubscribed as it was pricing, a market source said.

Nutanix priced an upsized $500 million of five-year convertible notes prior to the market open on Thursday at the rich end of coupon talk and richer than talk for an initial conversion premium.

Patrick Industries priced an upsized $150 million of five-year convertible notes within price talk after the market close on Wednesday.

While Patrick Industries’ new deal dominated trading activity during Thursday’s session, Nutanix was quiet after a buzz of activity in the morning, sources said.

As this week’s deals expanded on their debut, Exact Sciences Corp.’s recently priced 1% convertible notes due 2025 regained some strength after taking a nosedive on Wednesday, their third full trading day since pricing on Jan. 11.

Coupa Software Inc.’s recently priced 0.375% convertible notes due 2023 continued to make gains on an outright basis, jumping more than 3 points in active trading during Thursday’s session.

Nutanix expands

Nutanix was in demand during the subscription process with the offer oversubscribed as it was pricing, according to market sources. “That’s why they got away with the coupon and premium,” a market source said.

Nutanix priced an upsized $500 million of five-year convertible notes prior to the market open on Thursday with a coupon of 0%, at the rich end of talk, and with an initial conversion premium of 33%, richer than talk.

Price talk had been for a coupon of 0% to 0.5% and an initial conversion premium of 25% to 30%, according to a market source.

BofA Merrill Lynch, Goldman Sachs & Co. and Morgan Stanley & Co. LLC are bookrunners for the Rule 144A deal, which carries an upsized greenshoe of $75 million.

The initial size of the deal had been $400 million with a greenshoe of $60 million.

The 0% notes traded up to 103.5 early Thursday while Nutanix stock remained unchanged at $36.73. The notes settled around 102 to 102.5 as the stock dropped 1% to 2%, a market source said.

The notes expanded 3 to 3.5 points on a dollar-neutral basis, the source said. “They definitely did well,” the source said.

The San Jose, Calif.-based cloud computing software company is a first-time issuer of convertible notes.

Patrick’s trading frenzy

Patrick Industries’ 1% convertible notes due 2023 dominated trading activity on Thursday. The notes traded more than 80 times and accounted for about $70 million of the $420 million in trading volume by dollar amount that was in play by late afternoon, according to a market source.

Patrick Industries priced an upsized $150 million deal with a coupon of 1% and an initial conversion premium of 35% after market close on Wednesday.

The deal came within talk for a coupon of 0.875% to 1.375% and an initial conversion premium of 32.5% to 37.5%.

BofA Merrill Lynch and Wells Fargo Securities LLC are bookrunners for the deal, which carries an upsized greenshoe of $22.5 million.

The initial size of the offering was $125 million with a greenshoe of $18.75 million.

The 1% notes were trading in a wide range early in Thursday’s session with a low that was just above par and a high of 104.15, according to a market source.

The notes were trading in a range of 101.5 to 102.5 in the afternoon, and were up about 0.5 point to 0.75 point on a dollar-neutral basis, a source said. Patrick Industries’ stock closed Thursday at its highest point of the day at $68.00, an increase of 4.45%.

The Elkhart, Ind.-based manufacturer and distributor of component products for the recreational vehicle, manufactured housing and marine industries is also a first-time issuer of convertible notes.

Last week’s deals

After taking a beating yesterday, Exact Sciences’ recently priced 1% convertible notes due 2025 rebounded slightly in scattered trading activity on Thursday. The notes gained about 1.5 points to solidify around 98.

Exact Sciences’ stock was also up on Thursday after a sell-off on Wednesday that was triggered by positive results in a clinical study from a Taiwan-based competitor. The stock closed Thursday at $48.79, an increase of 2.33%.

The Madison, Wis.-based molecular diagnostics company, which is focused on the early detection of colorectal cancer, priced $600 million of seven-year convertible notes with a 1% coupon and fixed conversion premium of 37% at an issue price of 98.75 after the market close on Jan. 11.

The greenshoe was fully exercised, lifting the size of the deal to $690 million. The notes solidified around 102 in their first few days of trading before nose-diving to the 96 to 97 range on Wednesday.

Meanwhile, Coupa’s 0.375% notes due 2023, in contrast, continued to make gains on an outright basis. The San Mateo, Calif.-based cloud platform for business spend management priced $200 million of convertible notes after the market close on Jan. 11 with an initial conversion premium of 32.5%.

The deal came at the rich end of price talk for a coupon of 0.375% to 0.875% and richer than talk for an initial conversion premium of 25% to 30%. The greenshoe was fully exercised, lifting the size of the deal to $230 million.

The 0.375% notes climbed 3 points to trade around 108. Coupa stock was also up on Thursday, closing the day at $37.59, an increase of 4.39%.

Mentioned in this article:

Coupa Software Inc. Nasdaq: COUP

Exact Sciences Corp. Nasdaq: EXAS

Nutanix Inc. Nasdaq: NTNX

Patrick Industries Inc. Nasdaq: PATK

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