Guess? hits the market, expands on debut; Silicon Laboratories jumps; Teradyne active

By Abigail W. Adams

Portland, Me., April 24 – The convertibles secondary market returned to action on Wednesday with new paper occupying the focus of the space.

There was $103 million on the tape about one hour into Wednesday’s session and $450 million on the tape by the late afternoon.

Guess? Inc.’s newly priced convertible notes dominated activity in the secondary space with the notes seeing large gains on both an outright and dollar-neutral basis.

While no new deals were announced on Wednesday, the success of Guess?’s deal might spur more issuers into the market, a source said.

However, earnings related news is expected to occupy the focus for the remainder of the week.

Silicon Laboratories’ 1.375% convertible notes due 2022 made large gains on both an outright and dollar-neutral basis as stock soared following a first-quarter earnings beat.

Teradyne Inc.’s 1.25% convertible notes due 2023 were also active and making gains on an outright basis following earnings.

While the convertible bonds were slow to trade on Wednesday, all eyes will be on Tesla Inc. during tomorrow’s session with the electric car manufacturer slated to release first-quarter earnings after the market close.

Guess? expands

Guess? priced an upsized $275 million of five-year convertible notes prior to the market open on Wednesday at the rich end of talk with a coupon of 2% and an initial conversion premium of 37.5%.

Price talk was for a coupon of 2% to 2.5% and an initial conversion premium of 32.5% to 37.5%, according to a market source.

While the deal size was upsized from $250 million, the greenshoe was downsized to $25 million from $37.5 million.

The new paper dominated activity in the secondary space and made large gains on an outright and dollar-neutral basis.

The 2% convertible notes were bid up 1.5 points pre-open and traded as high as 103.5 early in the session.

They were expanded 1 point dollar-neutral, a market source said.

However, the notes began to come in as the session progressed.

While still trading around 103 on an outright basis, the notes lost their large initial expansion. However, they were still expanded by 0.5 point to 0.75 point by the late afternoon, a market source said.

With more than $66 million on the tape early in the session and $100 million in the late afternoon, the 2% notes dominated activity in the secondary space, accounting for nearly ¼ of the total trading volume during Wednesday’s session.

Guess? stock continued to make gains early Wednesday after shooting up 12% on Tuesday.

Guess? stock closed Wednesday at $19.62, an increase of 4.64%.

Silicon Lab’s earnings

Silicon Lab’s 1.375% convertible notes due 2022 were also posting gains on an outright and dollar-neutral basis as stock soared following an earnings beat.

The 1.375% convertible notes rose 12 points outright to close the day at 128.625, according to a market source.

They were expanded 1 point dollar-neutral, a market source said.

Silicon Lab’s stock closed the day at $110.04, an increase of 17.56%.

Stock soared following a first-quarter earnings beat on both the top and bottom lines.

Silicon reported first-quarter earnings of 59 cents per share versus analyst expectations for earnings of 47 cents per share.

Revenue was $188.1 million versus analyst expectations for revenue of $188 million.

Silicon Labs also topped analyst recommendations on second-quarter guidance with revenue expected to be in the range of $202 million to $212 million in the current quarter versus analyst expectations for revenue of $202 million.

Teradyne active

Teradyne’s 1.25% convertible notes due 2023 were also active on Wednesday following a first-quarter earnings beat.

The 1.25% notes gained more than 10 points outright to close the day at 162.5, according to a market source.

More than $25 million of the bonds changed hands by the late afternoon.

Teradyne stock traded as high as $49.45 before closing the day at $47.99, an increase of 7.63%.

The automation equipment supplier beat on both the top and the bottom lines in its earnings report.

Teradyne reported earnings per share of 54 cents, which beat analyst expectations for earnings of 44 cents.

The company reported revenue of $494.1 million in the first quarter versus analyst expectations for revenue of $476 million.

Mentioned in this article:

Guess? Inc. NYSE: GES

Silicon Laboratories Nasdaq: SLAB

Teradyne Inc. Nasdaq: TER

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