Coupa hits the market, expands; DocuSign up dollar-neutral; Guess? drops post-earnings

By Abigail W. Adams

Portland, Me., June 7 – The convertibles primary market rounded out an active week with Coupa Software Inc. pricing an upsized offering.

The new paper skyrocketed on its secondary market debut.

Coupa’s new paper dominated activity in the secondary space with the notes accounting for nearly half of the $551 million in reported trading volume by mid-afternoon.

However, earnings-related news pushed some outstanding issues into the spotlight.

DocuSign Inc.’s 0.5% convertible notes due 2023 dropped outright but gained on a dollar-neutral, or hedged, basis as stock sold off following its first-quarter earnings report.

Guess? Inc.’s 2% convertible notes due 2024 dropped outright but were largely unchanged dollar-neutral as stock traded down following its first-quarter earnings.

Coupa in focus

Coupa priced an upsized $700 million of six-year convertible notes after the market close on Thursday at par with a coupon of 0.125% and an initial conversion premium of 35%.

Pricing came at the cheap end of revised talk for a coupon of 0% to 0.125% and an initial conversion premium of 35%, according to a market source.

Initial price talk was for a coupon of 0.125% to 0.625% and an initial conversion premium of 30% to 35%.

The greenshoe was also upsized to $105 million.

The initial size of the deal was for $500 million with a greenshoe of $75 million.

While the deal looked cheap at the midpoint of initial price talk, it modeled out to fair value at the midpoint of revised pricing.

Despite this, the notes skyrocketed out of the gate.

The 0.125% notes were changing hands at 103 versus a stock price of $120 early in the session.

With a 72% delta, the notes were up about 2 points dollar-neutral, a market source said.

They continued to improve as the session progressed and were trading at 103.5 in the mid-afternoon.

The expansion continued with the notes seen up 2.25 points dollar-neutral, according to a market source.

The 0.125% notes accounted for nearly half of the total trading volume during Friday’s session.

Coupa’s new offering saw $169 million in reported volume early in Friday’s session and $250 million by the mid-afternoon.

The San Mateo, Calif.-based cloud platform for business spend management is well-liked among investors, sources said.

Its stock has been on a straight upward trajectory.

Coupa priced a $230 million issue of 0.375% convertible notes due 2023 in January 2018.

The 0.375% convertible notes were also active on Friday with the bonds changing hands just above parity, a market source said.

They were seen at 268.5 early in the session and traded up to 272.25 in the afternoon, sources said.

Coupa stock closed Friday at $121.24, an increase of 2.55%.

DocuSign expands

DocuSign’s 0.5% convertible notes due 2023 dropped on an outright basis but expanded dollar-neutral as stock sold off after the company reported earnings.

The 0.5% notes were down about 4 points outright. They were changing hands around 101.25 in the late afternoon and were quoted at 101 at the market close.

However, the notes saw a large expansion and were up about 1 point on a dollar-neutral basis, a market source said.

The notes were active with more than $20 million in reported volume by the late afternoon.

DocuSign stock tanked in response to its first-quarter earnings, trading as low as $45.675 before closing the day at $48.18, a decrease of 11.98%.

Stock sold off despite an earnings beat.

The electronic signature company reported earnings per share of 7 cents versus analyst expectations for earnings per share of 5 cents.

However, billings growth and future guidance were weak, TheStreet.com reported.

Guess? drops

Guess?’s 2% convertible notes due 2024 dropped outright but were largely unchanged dollar-neutral after its first-quarter earnings.

The 2% notes traded down about 2 points outright. They were changing hands at 89.5 by the mid-afternoon, a market source said.

Guess? stock traded as low as $14.13 before closing the day at $14.42, a decrease of 8.04%.

Guess? reported first-quarter losses per share of 25 cents versus analyst expectations of 26 cents.

The clothing brand narrowly beat expectations. However, it also disappointed on forward guidance, a market source said.

While the 2% convertible notes traded up on their secondary market debut in late April, they have steadily traded down since.

The notes remained under pressure post-earnings, a market source said.

Mentioned in this article:

Coupa Software Inc. Nasdaq: COUP

DocuSign Inc. Nasdaq: DOCU

Guess? Inc. NYSE: GES

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