Morning Commentary: Splunk’s new 2023, 2025 convertibles trading actively around par

By Rebecca Melvin

New York, Sept. 19 – Splunk Inc.’s newly priced dual-tranche convertibles were both trading right around par on a delta-neutral basis on Wednesday after the San Francisco-based software company priced an upsized $1.85 billion of the notes in tranches due 2023 and 2025.

“They are both trading right around par, delta neutral, but they are trading actively,” a New York-based market source said.

Both tranches priced at par of 100.

Splunk priced the $1.1 billion of 0.5% five-year notes at the midpoint of coupon price talk and the $750 million tranche of 1.125% seven-year notes at the cheap end of coupon talk.

Both tranches priced at an initial conversion premium of 27.5%, which was the cheap end of talk for the initial conversion premium. But there is a capped call that lifts the conversion premium from the issuer’s perspective to 100%.

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