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Morning Commentary: Aurora hits the market, expands on debut; Atlassian notes active
By Abigail W. Adams
Portland, Me., Jan. 18 – Friday opened with the first convertible bond deal of 2019 hitting the secondary space.
Aurora Cannabis Inc. priced an upsized $300 million offering of five-year convertible notes prior to the market open on Friday at the cheap end of talk at par with a coupon of 5.5% and an initial conversion premium of 10%.
Price talk had been for a coupon of 5% to 5.5% and an initial conversion premium of 10% to 15%, according to a market source.
The greenshoe was also upsized to $45 million. The initial size of the deal had been $250 million with a greenshoe of $37.5 million.
The new paper was in focus in the secondary space and trading up on debut. The 5.5% convertible notes traded as high as 103 early in the session, a market source said.
They were seen changing hands at 102.5 with stock up just under 2%. Aurora stock traded at $6.70, an increase of 1.98%, shortly before 11 a.m. ET.
While the majority of trading activity was outright players, there were some trades on swap, a market source said.
Outside of the new paper, Atlassian Inc.’s 0.625% convertible notes due 2023 were active although the notes were trading largely flat after the software company reported second-quarter earnings.
After trading as high as 137.5 soon after the opening bell, the 0.625% convertible notes came in to change hands around 132, according to Trace data.
The majority of the trades were on swap, and the notes were moving mostly in line on a dollar-neutral, or hedged, basis, a market source said.
Atlassian stock jumped to as high as $100.00 soon after the opening bell but was trading around $93.61, an increase of 0.75%, shortly before 11 a.m. ET.
Atlassian reported earnings per share of 25 cents for the second-quarter, which beat analyst expectations of earnings per share of 21 cents.
The company reported revenue of $299 million versus analyst expectations for revenue of $288.3 million.
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