Morning Commentary: RingCentral convertible notes active on buyback

By Abigail W. Adams

Portland, Me., May 19 – The convertibles secondary space stood poised for a quiet end to a quiet week with trading volume light as activity surrounding new and recent issues continued to dry up.

Hopes for an active calendar were dashed this past week with the primary market sluggish compared to an explosion of high-grade issuance with the investment-grade primary market logging its busiest week of the year.

“That’s where the focus is,” a source said, pointing to the heavy trading of investment-grade rated convertible notes.

While IG rated convertibles remained active on Friday, it was topical news that drove early trading activity.

After logging two consecutive days of gains, equity indexes turned mixed early Friday after a strong open.

The Dow Jones industrial average was up 115 points, or 0.34%, the S&P 500 index was up 0.28%, the Nasdaq Composite index was up 0.08% and the Russell 2000 index was down 0.04% shortly before 11 a.m. ET.

There was $93 million in reported convertible bond trading volume one hour into the session although the top two names on trace accounted for nearly one-third of the activity in the space.

RingCentral Inc.’s 0% convertible notes due 2025 were lifted in heavy volume due to the company’s buyback of the notes.

The 0% notes jumped 2.25 points to 92.25, which appeared to be the buyback price, according to a market source.

There was $18 million in reported volume.

RingCentral’s stock was changing hands at $31.02, a decrease of 0.032%, shortly before 11 a.m. ET.

RingCentral announced pre-open that it had repurchased approximately $461 million in principal of the 0% notes for $425 million in cash in privately negotiated transactions.

The company used cash on hand and drawdowns from its term loan facility to fund the repurchases.

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