RingCentral prices $1 billion, contracts on debut; Exact Sciences, NuVasive down again

By Abigail W. Adams

Portland, Me., Feb. 28 – The convertibles primary market continued to bring forward new deals as losses intensified on Friday in the broader equity markets.

RingCentral Inc. priced $1 billion of five-year convertible notes after the market close on Thursday.

While volume was light, the new paper was “a disaster” in the secondary space and saw a large dollar-neutral contraction, a market source said.

Losses also continued to mount for Exact Sciences Corp.’s newly priced 0.375% convertible notes due 2028 and NuVasive Inc.’s new 0.375% convertible notes due 2025.

Outside of the new paper, Wayfair Inc.’s convertible notes were active and traded down on an outright basis as stock sold off following a fourth-quarter earnings miss.

While equities marked their biggest weekly loss since the financial crisis, the convertibles secondary space was largely holding on a dollar-neutral basis, a market source said.

Issuers that also have straight debt were the hardest hit in the sell-off, the source said.

RingCentral contracts

RingCentral priced $1 billion of five-year convertible notes after the market close on Thursday at par with a coupon of 0% and an initial conversion premium of 50%.

Pricing came in line with price talk for a fixed coupon of 0% and at the cheap end of talk for an initial conversion premium of 50% to 55%, according to a market source.

The new 0% notes were “a disaster” in the secondary space, a source said.

The 0% notes were seen as low as 97.25 with stock off more than 3% early in Friday’s session.

The notes traded off their lows on an outright basis and were seen changing hands around 99 in the mid-afternoon.

However, they were contracted about 1 point dollar-neutral, a market source said.

While the notes were down on an outright and dollar-neutral basis, trading volume was extremely light, sources said.

There was about $21 million in reported volume by the late afternoon, sources said.

RingCentral’s 0% convertible notes due 2023 were active on Friday, which was most likely due to the company’s buyback, a source said.

The 0% notes were changing hands at 279 versus a stock price of $226 in the mid-afternoon with about $13 million in reported volume.

RingCentral will use $509.6 million of the proceeds from its offering to repurchase $172.5 million of the principal amount of its 0% convertible notes due 2023 through privately negotiated transactions.

While RingCentral stock posted gains on Thursday, it was trading off with the overall market on Friday.

RingCentral stock traded to a low of $222.52 and a high of $238.42 before closing the day at $235.75, a decrease of 0.13%.

With the conversion price of the new 0% notes significantly higher than the 0% convertible notes due 2023, there was most likely a net buyer of stock, which kept the stock price up on Thursday even as the overall market plummeted, a source said.

Down again

Losses continued to mount on Friday for the new paper to price over the past week.

“People are running for the exit,” a source said.

Exact Sciences’ 0.375% convertible notes due 2028 continued to trade down on an outright and dollar-neutral basis.

The 0.375% notes traded down to 96.5 by the late afternoon. They were contracted another 0.5 point dollar-neutral, a market source said.

Exact Sciences stock traded to a low of $77.27 and a high of $82.78 before closing the day at $80.95, an increase of 0.16%.

NuVasive’s newly priced 0.375% convertible notes due 2025 also sank further below par during their second day in the secondary space.

The notes were seen changing hands at 97 in the late afternoon.

NuVasive stock traded to a low of $63.38 and a high of $65.86 before closing the day at $65.81, a decrease of 0.03%.

Wayfair’s earnings

Wayfair’s convertible notes were active and trading down on an outright basis as stock sank following a fourth-quarter earnings miss.

The home goods e-commerce company’s 1.125% convertible notes due 2024 were down more than 7 points to 84, according to a market source.

The 0.375% convertible notes due 2022 were down more than 6.5 point outright. They were changing hands at 91.625 versus a stock price of $59.83 in the late afternoon.

The 1% convertible notes due 2026 were down 6 points outright to 73.5.

Wayfair stock traded to a low of $52.41 and a high of $63.32 before closing the day at $63.21, a decrease of 9.76%.

Stock sank after Wayfair reported a wider-than-expected loss per share.

Wayfair reported a loss per share of $2.80 versus analyst expectations for a loss per share of $2.63. Revenue of $2.53 billion was in line with expectations.

Wayfair stock also cratered earlier in the month when it reported it was laying off 550 employees.

Mentioned in this article:

Exact Sciences Corp. Nasdaq: EXAS

NuVasive Inc. Nasdaq: NUVA

RingCentral Inc. NYSE: RNG

Wayfair Inc. NYSE: W

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