Maxeon Solar upsizes convertibles; Palo Alto, Cytokinetics active; Health Catalyst gains

By Abigail W. Adams

Portland, Me., July 10 – The convertibles primary market closed out a quiet week with one small offering pricing.

Maxeon Solar Technologies Pte. Ltd. priced an upsized $185 million of five-year convertible notes after the market close on Thursday.

The deal was unique with the convertible notes issued before the company went public. The new notes were not active in the secondary space.

Meanwhile, the secondary space closed out the week on firm footing with the tech sector continuing to lead the market higher.

Palo Alto Networks Inc.’s 0.375% convertible notes due 2025 were among the most actively traded issue in the secondary space with the notes continuing their expansion.

Several small, typically illiquid issues also saw heavy trading volume on Friday.

CytoKinetics Inc.’s 4% convertible notes due 2026 continued to skyrocket in active trading with the notes approaching triple par.

Health Catalyst Inc.’s 2.5% convertible notes due 2025 were also making large gains on an outright and dollar-neutral basis following news of an acquisition.

Maxeon upsizes, prices

Maxeon Solar priced an upsized $185 million of five-year convertible notes after the market close on Thursday at par at the cheap end of talk with a coupon of 6.5% and an initial conversion premium of 15%.

Price talk was for a coupon of 5.5% to 6.5% and an initial conversion premium of 15% to 25%, according to a market source.

While the deal was upsized, the greenshoe was downsized to $15 million.

The initial size of the offering was $175 million with a greenshoe of $26.25 million.

Maxeon is a wholly owned subsidiary of SunPower Corp. with plans to be spun off into an independent company.

The notes will be redeemed at 101 plus interest if the spinoff is not completed within three months of issuance.

The deal was largely unprecedented with the issuance of pre-IPO convertible notes rare and pre-IPO issuance from a spinoff even rarer, sources said.

The notes were not active on Friday, sources said.

Palo Alto improves

Palo Alto’s 0.375% convertible notes due 2025 were among the top traded issues in the secondary space with the notes continuing to improve.

The 0.375% notes were changing hands at 104.75 with stock off early in the session.

They traded up to 105 heading into the afternoon with stock off its lows.

The notes were expanded another 0.25 point to 0.375 point dollar-neutral on Friday after posting steady gains throughout the week, a source said.

The 0.375% notes have struggled below par since the cybersecurity company priced the $2 billion issue in early June.

However, the notes have steadily gained over the past two weeks with the tech sector on a tear.

While volume was lighter, Palo Alto’s 0.75% convertible notes due 2023 also saw some activity on Friday with the notes trading around 113.

Palo Alto stock traded to a low of $245.23 shortly after the opening bell.

However, stock bounced back and traded to a high of $249.00 before closing the day at $248.96, an increase of 0.15%.

CytoKinetics skyrockets

CytoKinetics’ 4% senior notes due 2026 continued to skyrocket in the secondary space with the notes approaching triple par.

The 4% notes were changing hands around 277 early in the session with stock up, according to a market source.

However, they dropped back down to 265.25 as stock sank into negative territory.

The issue is small and typically slow to trade. However, the notes saw high-volume activity on Friday with more than $8 million on the tape.

CytoKinetics stock traded to a high of $28.25 and a low of $25.21 before closing the day at $25.50, a decrease of 2.37%.

The biopharmaceutical company’s stock was $8.275 when it priced the $138 million issue in November 2019.

Health Catalyst gains

Health Catalyst’s 2.5% convertible notes due 2025 were also active and making large gains on an outright and dollar-neutral basis.

The 2.5% notes gained more than 6 points outright to trade up to 131.125 in the late afternoon.

They expanded 1 point dollar-neutral on an 80 delta, a source said.

The 2.5% notes are also largely illiquid. However, the notes saw more than $10 million in reported volume during Friday’s session.

Health Catalyst stock traded to a low of $32.50 and a high of $34.94 before closing the day at $33.95, an increase of 4.75%.

Stock was on the rise following news the health care data and analytics company acquired healthfinch, Inc., a workflow integration engine.

The deal was valued at $40 million and will be funded through a combination of cash and stock, according to a company press release.

The deal is expected to close in the third quarter.

Mentioned in this article:

CytoKinetics Inc. Nasdaq: CYTK

Health Catalyst Inc. Nasdaq: HCAT

Palo Alto Networks Inc. NYSE: PANW

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