RingCentral convertible notes contract; PROS Holdings flat; Canadian Solar skyrockets

By Abigail W. Adams

Portland, Me., Sept. 11 – The first new convertible notes of the week hit the secondary space on Friday with the primary market pricing $1 billion over three deals after the market close Thursday.

However, the new notes from RingCentral Inc., Canadian Solar Inc. and PROS Holdings, Inc. were following different trajectories on their aftermarket debut.

RingCentral’s new paper traded off on an outright and dollar-neutral basis.

While PROS Holdings’ convertible notes dropped below par, they were largely flat dollar-neutral.

However, Canadian Solar skyrocketed on both an outright and dollar-neutral basis.

Despite the influx of new paper, trading volume remained light with $400 million on the tape about one hour before the market close.

Trading volume in the new paper was also relatively light with the issues well-placed, sources said.

RingCentral below par

RingCentral priced an upsized $650 million of convertible notes due March 15, 2026 after the market close on Thursday at par with a coupon of 0% and an initial conversion premium of 52.5%.

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

The new paper was “not doing well,” a source said.

While the 0% notes due 2026 were flat out of the gate, they dropped below par as stock sold off early Friday.

The 0% notes were marked at 98.5 bid, 99 offered early in the session. They continued to trade down as stock got “walloped,” a source said.

The notes were trading at 96 in the late afternoon.

They were contracted about 0.5 to 0.75 point dollar-neutral, a source said.

The notes were among the most actively traded during Friday’s session with about $20 million in reported volume in the late afternoon.

RingCentral’s stock traded to a high of $274.99 and a low of $251.21 before closing the day at $254.74, a decrease of 8.38%.

While stock was taking a hit on Friday, it surged on Thursday, closing the day up more than 7%.

It is rare for a stock to perform so well while a convertible notes offering is being marketed, a source said.

RingCentral became the latest company to use proceeds from a new offering to repurchase its outstanding notes.

Concurrently with the offering, the company repurchased $132.6 million of its 0% convertible notes due 2023 for $452.5 million in cash in individually negotiated transactions.

Remaining proceeds may be used for the redemption of the 0% convertible notes, the company said in a press release.

The 0% notes due 2023 become callable on Sept. 20 provided stock continues to trade at a 130% premium to the notes’ conversion price of $81.45.

Canadian Solar soars

Canadian Solar priced $200 million of five-year convertible notes after the market close on Thursday at par with a coupon of 2.5% and an initial conversion premium of 32.5%.

Pricing came at the midpoint of talk for a coupon of 2.25% to 2.75% and at the rich end of talk for an initial conversion premium of 27.5% to 32.5%, according to a market source.

The new paper soared in the aftermarket.

The 2.5% notes hit as high as 105 out of the gate. They were changing hands around 104.5 about one hour into the session.

While the notes came in alongside stock as the session progressed, they maintained a large dollar-neutral expansion.

The 2.5% notes were seen changing hands at 103.25 in the late afternoon.

The notes were seen expanded 2.5 to 3 points dollar-neutral early in the session, sources said.

They were up more than 2 points dollar-neutral in the late afternoon.

The bonds saw about $11 million in reported volume with a lot of swap trades on the tape, sources said.

Canadian Solar’s stock traded to a high of $29.21 and a low of $27.98 before closing the day at $28.42, an increase of 2.69%.

PROS Holdings flat

PROS Holdings priced $150 million of seven-year convertible notes after the market close on Thursday at par at the midpoint of talk with a coupon of 2.25% and an initial conversion premium of 32.5%.

Price talk was for a coupon of 2% to 2.5% and an initial conversion premium of 30% to 35%, according to a market source.

While volume in the name was light, the new paper fell flat in the aftermarket.

The notes were wrapped around par early in the session but traded down to 99.5 in the late afternoon, sources said.

While the notes stood poised to close the day below par, they were largely flat dollar-neutral, a source said.

PROS Holdings’ stock traded to a high of $31.22 and a low of $30.35 before closing the day at $31.01, a decrease of 1.74%.

Mentioned in this article:

Canadian Solar Inc. Nasdaq: CSIQ

PROS Holdings, Inc. NYSE: PRO

RingCentral Inc. NYSE: RNG

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