Morning Commentary: Pluralsight convertibles dominate secondary, trade up on debut

By Abigail W. Adams

Portland, Me., March 7 – Thursday opened with more new convertibles paper hitting the secondary space.

Pluralsight, Inc. priced an upsized $550 million of five-year convertible notes prior to the market open on Thursday at par with a coupon of 0.375% and an initial conversion premium of 32.5%.

Pricing came at the rich end of talk for a coupon of 0.375% to 0.875% and at the midpoint of talk for an initial conversion premium of 30% to 35%, according to a market source.

The greenshoe was also upsized to $83.5 million.

The initial size of the deal was $450 million with a greenshoe of $67.5 million.

The convertible notes priced concurrently with an underwritten offering of 13,558,464 common shares from selling stockholders, which priced at $29.25 per share.

The deal was heard to be in hot demand during the subscription process. The demand followed the notes into the secondary space.

The new paper accounted for $103 million of the $183 million on the tape early in the session.

The 0.375% notes were trading up on debut. They were changing hands around 100.875 with stock down early in the session, according to a market source.

Pluralsight stock was $29.18, a decrease of 1.41%, shortly before 11 a.m. ET.

Meanwhile, Ares Capital Corp.’s 4.625% convertible notes due 2024 remained active in the secondary space. However, the notes were continuing to trade around their 98 issue price.

About $5 million of the bonds changed hands one hour into Thursday’s session.

The deal experienced some pushback during bookbuilding with price talk revised to include a discount.

Exact Sciences Corp.’s 0.375% convertible notes due 2027 also continued to see active trading. The new paper was changing hands around 99.8 early in the session with stock again trading down.

Stock was $85.28, a decrease of 0.34%, shortly before 11 a.m. ET.

About $4 million of the bonds were on the tape early in the session.

The 0.375% notes priced at 99.5. They were expanded 1 point dollar-neutral on their secondary market debut on Wednesday.

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