Workday in focus post-earnings; Nutanix jumps after private placement; Middleby active

By Abigail W. Adams

Portland, Me., Aug. 28 – The convertibles primary market was abnormally active over the past week, with three issuers pricing a cumulative $1.34 billion in the heart of the summer doldrums.

While the primary market is traditionally dormant in the week before Labor Day, sources said they would not be surprised to see another deal or two price in the coming week.

“Normally I’d say no, but this year is anything but normal,” a source said. “I wouldn’t write it off.”

Meanwhile, the convertibles secondary space was active for a Friday in late August with $86 million in reported volume about one hour into the session and $367 million on the tape about one hour before the market close.

Trading of the three deals that priced over the course of the week was light with earnings and company news pushing outstanding issues into focus.

Workday Inc.’s 0.25% convertible notes due 2022 were making large gains on an outright basis as stock broke out to a new 52-week high following the company’s second-quarter earnings report.

Nutanix Inc.’s 0% convertible notes due 2023 were also on the rise following an earnings beat and a private placement of convertible notes.

Middleby Corp.’s 1% convertible notes due 2025 hit their highest outright level since pricing last week.

Workday in focus

Workday’s 0.25% convertible notes due 2022 were in focus on Friday with the notes making large outright gains as stock broke out to a new 52-week high.

The 0.25% notes rose almost 19 points outright with stock up more than 14% during Friday’s session.

The notes were changing hands at 170 shortly after the opening bell and climbed to 172.5 in the late afternoon, a source said.

The notes were among the most actively traded of Friday’s session with $18 million in reported volume by the late afternoon.

Workday stock set a new 52-week high on Friday.

Stock traded to a high of $248.75 and a low of $238.08 before closing the day at $243.88, an increase of 12.58%.

The financial management and human resources software company reported second-quarter earnings per share of 84 cents versus analyst expectations for earnings per share of 66 cents.

Revenue was $1.06 billion versus analyst expectations for revenue of $1.04 billion.

Stock was also trading up after the company raised its forward guidance.

Revenue guidance for the fiscal year was raised to $3.73 billion to $3.74 billion as a result of the strong quarter.

Nutanix’s earnings

Nutanix’s 0% convertible notes due 2023 were also active and posting gains following an earnings beat.

The 0% notes rose almost 6 points outright as stock soared more than 30%.

The long-busted convertible notes rose to 98.125 in the late afternoon with the yield now 0.8%, according to a market source.

The notes saw more than $13.5 million in reported volume in the late afternoon.

Nutanix stock traded to a high of $28.53 and a low of $23.09 before closing the day at $28.03, an increase of 29.17%.

Stock saw its largest single-day percentage gain in the company’s history, MarketWatch reported.

Stock soared after an earnings beat and a slew of announcements from the company, including the resignation of its CEO and the private placement of convertible notes.

Bain Capital Private Equity bought $750 million in 2.5% convertible notes due 2026 in a private placement, making it the leading investor in the cloud computing company.

The 2.5% notes carry an initial conversion premium of 30.6% and an initial conversion price of $27.75, which may be adjusted to $25.25 to $27.75 on the one-year anniversary of the notes, according to a company news release.

Goldman Sachs & Co. LLC was financial adviser and placement agent for the notes.

Middleby active

Middleby’s 1% convertible notes due 2025 saw renewed attention in the secondary space with the notes making outright gains.

The 1% notes rose 1 point outright with stock up more than 3% on Friday.

The notes were changing hands at 104 in the late afternoon, their highest outright level since their aftermarket debut on Aug. 19, sources said.

Middleby stock traded to a low of $96.35 and a high of $99.89 before closing the day at $99.82, an increase of 3.33%.

The 1% notes are a potential addition to the Refinitiv Convertible Indices to be reviewed on Sept. 2.

Mentioned in this article:

Middleby Corp. Nasdaq: MIDD

Nutanix Inc. Nasdaq: NTNX

Workday Inc. Nasdaq: WDAY

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