Fisker on tap; Cloudflare, Avalara convertibles struggle on debut; Intercept below par

By Abigail W. Adams

Portland, Me., Aug. 11 – New convertibles paper was in focus on Wednesday with the convertibles primary market launching a new $600 million offering after the market close and almost $2.5 billion flooding the secondary space after an extended period of muted new deal activity.

Fisker Inc. plans to price $600 million of five-year green convertible notes after the market close on Thursday with price talk for a coupon of 1.5% to 2% and an initial conversion premium of 40% to 45%, according to a market source.

J.P. Morgan Securities LLC is the bookrunner for the Rule 144A offering, which carries a greenshoe of $90 million.

Cloudflare Inc. priced an upsized $1.125 billion of five-year convertible notes and Avalara Inc. priced $850 million of five-year convertible notes after the market close on Tuesday.

In addition, Intercept Pharmaceuticals Inc. priced $500 million 3.5% convertible notes due 2026 as part of a privately negotiated exchange.

However, the new paper was struggling in the aftermarket with all three deals falling below par on an outright basis.

Meanwhile, Coinbase Global Inc.’s 0.5% convertible notes due 2026 continued their upward momentum on an outright basis following the crypto-currency exchange’s earnings report.

Cloudflare below par

Cloudflare priced an upsized $1.125 billion of five-year convertible notes after the market close on Tuesday at the rich end of talk with a coupon of 0% and an initial conversion premium of 52.5%.

Price talk was for a coupon of 0% to 0.5% and an initial conversion premium of 47.5% to 52.5%, according to a market source.

The greenshoe was also upsized to $168.75 million.

The initial size of the offering was $1 billion with a greenshoe of $150 million.

The new paper was struggling on an outright basis.

The notes opened at 99.5 with the majority of trades between 99.125 and 99.625 early in the session.

They continued to trend lower as the session progressed and were seen changing hands at 98.75 versus an equity price of $118.50 in the late afternoon.

While the notes were down outright, they expanded about 0.25 point on a dollar-neutral basis, sources said.

The new paper was in focus with more than $90 million in reported volume heading into the market close.

The new paper hit the secondary space on a weak day for the company’s stock.

Cloudflare’s stock traded to a high of $124 and a low of $116.38 before closing the day at $119.01, a decrease of 5.16%.

Cloudflare’s stock set a new 52-week high of $127.70 on Tuesday.

Concurrently with the new offering, the company entered into privately negotiated transactions with holders of its 0.75% convertible notes due 2025 to exchange $400 million in the principal amount for $400.7 million in cash and 7.6 million shares.

Avalara flat

Avalara priced $850 million of five-year convertible notes after the market close on Tuesday at par with a coupon of 0.25% and an initial conversion premium of 47.5%.

Pricing came at the midpoint of talk for a coupon of 0% to 0.5% and at the rich end of talk for an initial conversion premium of 42.5% to 47.5%, according to a market source.

The new paper dipped below par in intraday activity, although it stood poised to close the day above.

Avalara’s 0.25% notes were changing hands between 99.625 and 99.75 out of the gate.

However, the notes popped above par about one hour into the session and were marked at 100 bid, 100.5 offered.

The notes were marked at par bid versus Tuesday’s closing price of $125.48 on swap in the late afternoon.

They were flat on a dollar-neutral basis, a source said.

There was about $80 million in reported volume.

Avalara’s stock traded to a low of $158.07 and a high of $162.28 before closing the day at $162.28, an increase of 0.36%.

Intercept’s exchange

Intercept’s newly priced 3.5% convertible notes due 2026 were also struggling on an outright basis in the aftermarket.

The notes were marked at 98.5 bid, 100.5 offered versus a stock price of $15.50 in the late afternoon.

They were seen changing hands at 99.

There was about $10 million in reported volume.

Intercept’s stock traded to a low of $15.05 and a high of $16 before closing the day at $15.27, a decrease of 8.84%.

The notes priced as part of an exchange for $306.5 million of Intercept’s outstanding 3.25% convertibles due 2023 and $114.7 million of the 2% convertibles due 2026.

Coinbase active

Coinbase’s 0.5% convertible notes due 2026 were active with the notes continuing their upward momentum on an outright basis as stock continued to grind higher following the cryptocurrency exchange’s earnings report.

The 0.5% notes were changing hands at 110.25 versus a stock price of $276.85 in the late afternoon.

While up outright, the notes were largely moving in line dollar-neutral, a source said.

Coinbase’s stock traded to a low of $274.35 and a high of $294 before closing the day at $278.40, an increase of 3.24%.

Coinbase reported earnings per share of $6.42 versus analyst expectations for earnings of $2.32.

Revenue was $2.03 billion versus analyst expectations for revenue of $1.821 billion.

While Coinbase crushed analyst expectations, the company warned of lower users and trading volume in the third quarter due to moderating volatility in digital assets, Investor’s Business Daily reported.

Mentioned in this article:

Cloudflare Inc. NYSE: NET

Coinbase Global Inc. Nasdaq: COIN

Fisker Inc. NYSE: FSR

Intercept Pharmaceuticals Inc. Nasdaq: ICPT

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.