Avalara convertible notes up on buyout approval; Splunk jumps; DISH notes improve

By Abigail W. Adams

Portland, Me., Oct. 17 – The convertibles secondary space was quiet yet firm on Monday as equities ripped to the upside in another dramatic reversal of market sentiment.

Markets opened strong and held onto much of their gains on Monday with the Dow Jones industrial average closing up 551 points, or 1.86%, the S&P 500 index closing up 2.65%, the Nasdaq Composite index closing up 3.43% and the Russell 2000 index closing up 3.17%.

“It’s risk-on today,” a source said.

There was $73 million in reported volume about one hour into the session and $330 million in reported volume about one hour before the market close with topical news the driving force of trading activity.

Avalara Inc.’s 0.25% convertible notes due 2026 jumped in heavy volume after shareholders voted to approve its acquisition by Vista Equity Partners.

Splunk Inc.’s convertible notes were making large gains on an outright and dollar-neutral basis as stock surged following reports an activist investor had taken a large stake in the company.

DISH Network Corp.’s convertible notes (B2/CCC) were boosted with the satellite broadcaster’s credit improving as it mulls a divestiture of Boost Mobile.

Avalara’s buyout

Avalara’s 0.25% convertible notes were trading up to their takeover potential following shareholder approval of the company’s acquisition by private equity firm Vista Equity Partners.

The 0.25% convertible notes jumped more than 2.5 points outright on news of the approval.

They were changing hands at 99.25 early in the session, a level it largely maintained for the duration of the session.

The notes dominated the tape with $35 million in reported volume.

The notes were active and trading on a 97-handle heading into the shareholder vote on Oct. 14.

While the notes were trading with a degree of certainty that the takeover would garner approval, there was an element of opposition.

Shareholder Altair US announced its opposition to the merger, which it claimed undervalued the company, and vowed to vote against it.

Vista Equity Partners announced its acquisition of the tax software company for $93.50 per share in an all-cash transaction in early September.

The notes will be taken out at par in the transaction.

Splunk gains

Splunk’s convertible notes were making large gains in active trade on Monday as stock surged following news activist investor Starboard Value has a sizable stake in the company.

The 1.125% notes jumped 3.5 points outright with stock up almost 6%.

They were changing hands at 81.25 versus a stock price of $74.40 early in the session.

They remained on an 81-handle as the session progressed.

There was $18 million in reported volume.

While less active, Splunk’s 1.125% convertible notes due 2025 jumped 2 points outright with the notes changing hands at 90.

There was $5 million in reported volume.

The notes expanded dollar-neutral on the move up.

Splunk’s stock traded to a low of $73.54 and a high of $76.59 before closing the day at $74.04, an increase of 5.43%.

The software company’s stock jumped following news Starboard Value had amassed a stake of just under 5% in the company.

DISH better

DISH’s 0% convertible notes due 2025 were on the rise as the satellite broadcaster’s credit continued to improve as it mulls a divestiture of its wireless network Boost Mobile.

The 0% notes due 2025 gained 2.25 points outright in heavy volume.

They were changing hands at 66.5 in the late afternoon with a yield of 13.3%, according to a market source.

There was $15 million in reported volume.

While less active, DISH’s 3.375% convertible notes due 2026 rose 1 point outright to 69.5 in the late afternoon with the yield just shy of 14%.

The 2.375% convertible notes due 2024 were largely unchanged at 91.25 with the yield 14%.

DISH’s stock traded to a low of $13.29 and a high of $14.15 before closing the day at $13.91, an increase of 7.33%.

DISH’s credit continued to improve as it considers a divestiture of the wireless network assets acquired from Sprint due to Sprint’s merger with T-Mobile in 2020.

DISH is considering selling its wireless arm to DISH chair Charlie Ergen’s special acquisition vehicle Conex Corp.

Conex is holding a special shareholders meeting on Oct. 31 to ask for an extension to its business combination deadline from Nov. 3 to June 3.

Mentioned in this article:

Avalara Inc. NYSE: AVLR

DISH Network Corp. Nasdaq: DISH

Splunk Inc. Nasdaq: SPLK

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