Morning Commentary: New Proofpoint deal looks somewhat cheap; existing Proofpoint comes in small

By Rebecca Melvin

New York, June 11 – Proofpoint Inc.’s planned $150 million offering of five-year convertibles looks about 1.4% cheap at the midpoint of talk using a credit spread of 375 basis points over Libor and a 37% vol., a market source said early Thursday.

The new Proofpoint deal, launched late Wednesday, was talked to yield 0.75% to 1.25% with an initial conversion premium of 30% to 35%.

Proofpoint’s existing 1.25% convertibles due 2018 were seen holding at a level of 164 bid, 164.50 offered versus an underlying share price of $61.16, a New York-based sellside analyst said.

The indicative level on the old deal was decent, he said.

“The old ones have held up better than expected. They are down maybe 0.125 point to 0.25 point,” he said.

Shares of the Sunnyvale, Calif.-based security-as-a-service vendor were down $1.91, or 3%, at $59.25 at late morning.

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