Enphase convertibles price, expand on debut; Nio’s decline continues; Nutanix active

By Abigail W. Adams

Portland, Me., May 31 – The convertibles primary market rounded out an active week with a new deal pricing.

Enphase Energy Inc. sold $120 million of five-year convertible notes prior to the market open on Friday.

The new notes were expanding dollar-neutral on debut.

MFA Financial Inc.’s 6.25% convertible notes due 2024 continued to improve on Friday while Nio Inc.’s 4.5% convertible notes due 2024 continued their downward spiral.

Nutanix Inc.’s 0% convertible notes due 2023 were active in the secondary space and dropping outright as stock tanked following its third-quarter earnings report.

However, the notes were largely flat dollar-neutral.

Enphase expands

Enphase Energy priced $120 million of five-year convertible notes prior to the market open on Friday at par to yield 1% with an initial conversion premium of 30%.

Pricing came in line with talk for a fixed coupon of 1% and at the rich end of talk for an initial conversion premium of 25% to 30%, according to a market source.

The deal was in demand during bookbuilding.

With proceeds used to take out Enphase Energy’s 4% convertible notes due 2023, holders of the existing notes were major participants of the new offering, a source said.

There was also high demand from a broader investor base.

The 4% convertible notes due 2023 skyrocketed since they priced in August 2018, reaching almost triple par.

Proceeds from Enphase Energy’s new offering will be used to repurchase the outstanding $60 million of the company’s 4% convertible notes due 2023 in privately negotiated transactions.

Holders will receive an aggregate 10.8 million shares of common stock, in addition to a $6 million cash amount in the exchange, according to a company news release.

The new 1% convertible notes due 2024 were not seen on the tape early in Friday’s session but were active heading into the afternoon.

The demand for the notes during bookbuilding carried into the secondary space with the notes making large gains on both an outright and dollar-neutral basis.

The 1% notes traded as high as 102 during Friday’s session but came in to change hands around 100.75 in the mid-afternoon.

Enphase Energy’s stock was trading down on Friday alongside the broader market.

Stock closed the day at $15.17, a decrease of 3.8%.

MFA improves

MFA Financial’s recently priced 6.25% convertible notes due 2024 continued to improve on Friday.

The notes were seen trading up to par in the mid-afternoon with stock off slightly.

MFA Financial stock closed Friday at $7.04, a decrease of 0.71%.

The New York-based real estate investment trust priced $200 million of the 6.25% notes at 99 prior to the market open on Thursday.

The notes traded as high as 99.75 during Thursday’s session.

Nio down again

Nio’s 4.5% convertible notes due 2024 continued their downward spiral on Friday.

The notes dropped another 3 points outright to trade down to 59 early in the session. They regained some footing and traded up to 60 in the afternoon.

The convertible notes have been under pressure and spiraling lower in active trading over the past two weeks.

While the notes were trading down in the run up to the Shanghai-based electric car manufacturer’s first-quarter earnings report, they saw a slight bump in its wake on Monday with revenue beating expectations.

However, the convertible notes have steadily traded down since as investors digested a drop in vehicle sales.

Nio’s ADSs continued to sink on Friday closing the day at $3.05, a decrease of 5.86%.

Nutanix active

Nutanix’s 0% convertible notes due 2023 were active and continuing to trade down on Friday as stock tanked following its third-quarter earnings report.

The 0% convertible notes dropped more than 5 points outright to close the day at 96.375, according to a market source.

They were flat to slightly contracted dollar-neutral, a market source said.

Nutanix stock tanked on Friday, trading as low as $25.50 before closing the day at $28.07, a decrease of 14.08%.

While Nutanix beat analyst expectations on the bottom line, it missed on the top and released weak fourth-quarter guidance.

Nutanix reported losses per share of 56 cents versus analyst expectations for losses per share of 58 cents.

Revenue was $287.6 million, which missed analyst expectations of $297.2 million.

Nutanix said it expected revenue of $280 million to $310 million in the fourth quarter. Analysts had been expecting $332.9 million.

Nutanix’s convertible notes and stock were also active and trading down on Monday following an analyst downgrade.

Mentioned in this article:

Enphase Energy Inc. Nasdaq: ENPH

MFA Financial Inc. NYSE: MFA

Nio Inc. NYSE: NIO

Nutanix Inc. Nasdaq: NTNX

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