Upsized Proofpoint gains outright; Ctrix drops on swap; Twitter issues little changed

By Rebecca Melvin

New York, June 12 – Proofpoint Inc.’s new 0.75% convertibles traded up on an outright basis on Friday after the Sunnyvale, Calif.-based internet security-services company priced an upsized $200 million of the five-year senior notes at the rich end of talked terms.

The new Proofpoint 0.75% convertibles due 2020 were quoted up at 103.5 on an outright basis in the early going and accounted for a good chunk of Friday’s trading action, market sources said.

Back in established issues, Citrix Systems Inc.’s 0.5% convertibles due 2019 dropped sharply in active trade on Friday after news that Standard & Poor’s is removing its unsolicited rating on the Fort Lauderdale, Fla.-based cloud computing company. The bonds were down 2 points on swap after trading weakly on Thursday, a New York-based trader said.

Meanwhile, Twitter Inc.’s dual convertible bond issues were little changed and very quiet after the San Francisco-based social media company announced late Thursday that chief executive Dick Costolo is stepping down.

Equities fell on Friday as investors became more defensive heading into the weekend after news that the International Monetary Fund has left the negotiating table on a Greek bailout package due to lack of progress.

The Dow Jones industrial average fell 140.53 points, or 0.8%, to 17,898.84; the S&P 500 stock index lost 14.75 points, or 0.7%, to 2,094.11, and the Nasdaq stock market came in 31.41 points, or 0.6%, to 5,051.10.

Proofpoint gains outright

Proofpoint’s 0.75% convertibles due 2020 traded up to 103.5 in the early going Friday and traded consistently in that context with shares up modestly.

The bonds moved up or down from that level by only about 0.125 point, a syndicate source said at late morning.

The new bond was outperforming its underlying shares, which were up about 25 cents at $60.44. Shares closed up at little better, or up 0.8%, at $60.65.

They were actively traded, but on an outright basis only in morning trade. There was no swap demand yet, the syndicate source said.

“They traded up, pretty well, with a lot of action both ways,” the source said.

The Rule 144A offering was upsized to $200 million from $150 million, and priced at the rich end of talked terms, which was for a yield of 0.75% to 1.25% and a premium of 30% to 35%.

Citrix drops 2 points on swap

Citrix’s 0.5% convertibles due 2019 initially extended gains on an outright basis on Friday, moving up to the 109 context from 108 amid continuing speculation about what an activist investor’s recommendations might mean for the company.

But the bonds plunged back, even as shares remained higher, on the heels of news that S&P has withdrawn its unsolicited ratings on Citrix based on lack of investor interest.

S&P has a BBB corporate credit rating on the company.

The Citrix bonds were quoted at 107.25 versus an underlying share price of $72.60 on Friday afternoon.

“There is a lot of speculation and we don’t know a lot, but the bonds are down 2 points on swap,” a trader said, citing the ratings removal for the drop.

On Thursday the bonds came in a little bit on higher shares after news that activist investor Elliott Management, which holds a 7.1% stake, is urging the company to buy back shares, sell some assets and cut costs to promote share value.

Twitter issues quiet

Twitter’s 0.25% convertibles due 2019 were quoted at 90 bid, 90.5 offered with the underlying shares at $35.85 on Friday afternoon.

The Twitter 1% convertibles due 2021 were quoted at 90.125.

They were basically unchanged, a New York-based trader said.

Shares of the San Francisco-based social-media company had been up more than 1% but fell back to about the unchanged mark after word that the company’s chief executive, Dick Costolo, is stepping down July 1 and being replaced on an interim basis by co-founder Jack Dorsey.

Costolo, who has served as CEO since 2010, said it was time for a change.

The company said the board will undertake a thorough executive search to find its next top manager, the company said.

Mentioned in this article:

Citrix Systems Inc. Nasdaq: CTXS

Proofpoint Inc. Nasdaq: PFPT

Twitter Inc. Nasdaq: TWTR

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