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Morning Commentary: Workday prices in middle of talk; Wayfair’s new issue continues to gain
By Stephanie N. Rotondo
Seattle, Sept. 13 – After announcing a deal late Monday, Workday Inc. finally priced its $1 billion offering of convertible senior notes due 2022 before the market opened on Wednesday.
The deal came with a yield of 0.25% and an initial conversion premium of 37.5%. The terms came right in the middle of the 0% to 0.5% yield talk and the 35% to 40% conversion premium talk.
Morgan Stanley & Co. LLC and BofA Merrill Lynch are the joint bookrunners.
In early dealings, a trader saw the bonds a touch better than their par issue price, pegging the paper in a 100.25 to 100.5 context.
The company’s stock (NYSE: WDAY) was also a shade higher at mid-morning, rising 82 cents to $107.30.
The company plans to use proceeds from the offering to repay or repurchase its outstanding 0.75% convertible senior notes due 2018 and 1.5% convertible senior notes due 2020, or to pay cash amounts due on those bonds upon conversion.
As for Wayfair Inc.’s $375 million of 0.375% convertible senior notes due 2022 – a deal priced late Monday – it continued to trend higher.
A trader placed the issue at 105.875 bid, 106.125 offered at mid-morning.
The paper had been trading with a 104 handle as of Tuesday’s close.
Wayfair’s stock (NYSE: W) was slightly softer, however, after pushing up nearly 7% on Tuesday.
The equity was down 91 cents, or 1.10%, at $81.47.
The Rule 144A deal was increased from an expected $300 million. Initial price talk was for a 0.625% to 1.125% yield and an initial conversion premium of 32.5% to 37.5%.
Goldman Sachs & Co. and Citigroup Global Markets Inc. ran the books.
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