Coupa, WisdomTree convertibles on deck; Okta, Aptiv eyed; Jazz flat; Glaukos volatile

By Abigail W. Adams

Portland, Me., June 9 – The convertibles primary market is roaring into the final weeks of the second quarter with the June 8 week already another multi-billion-dollar week for new issuance.

The primary market saw $1.1 billion price over two deals after the market close on Monday, $2 billion is set to price in two deals after the market close on Tuesday, a $150 million offering is on deck for before the market open and a $1.1 billion offering for after the market close on Wednesday.

Coupa Software Inc. plans to price $1.1 billion of six-year convertible notes after the market close on Wednesday with price talk for a coupon of 0.125% to 0.625% and an initial conversion premium of 30% to 35%, according to a market source.

Goldman Sachs & Co. LLC, BofA Securities Inc., Barclays and J.P. Morgan Securities LLC are joint bookrunners for the Rule 144A offering, which carries a greenshoe of $165 million.

WisdomTree Investments Inc. plans to price $150 million of three-year convertible notes before the market open on Wednesday.

Okta Inc. plans to sell $1 billion of six-year convertible notes and Aptiv plc plans to price $1 billion, or 10 million shares, of three-year par-of-$100 series A mandatory convertible preferred stock after the market close on Tuesday.

While Okta’s offering modeled cheap based on underwriters’ assumptions, it followed the trend of recent tech deals that have been pricing increasingly tighter.

As market players eyed the deals in the pipeline, new paper from Jazz Pharmaceuticals plc and Glaukos Corp. made their aftermarket debut.

The new paper hit the secondary space on a volatile day for equities.

Indexes launched the day in the red, pared their losses as the session progressed, and closed the day mixed with the Dow Jones industrial average down 1.09%, the S&P 500 index down 0.78% but the Nasdaq composite up 0.29%.

The new paper from Jazz dominated activity in the secondary space and was largely flat on an outright and dollar-neutral basis.

While new paper from Glaukos dropped below par on an outright basis, it was expanded dollar-neutral.

WisdomTree on deck

WisdomTree plans to price $150 million of three-year convertible notes prior to the market open on Wednesday with price talk for a coupon of 3.75% to 4.25% and an initial conversion premium of 60%, according to a market source.

The deal was heard to be wall-crossed, sources said.

Okta eyed

Okta plans to price $1 billion of six-year convertible notes after the market close on Tuesday with price talk for a coupon of 0.125% to 0.625% and an initial conversion premium of 32.5% to 37.5%.

The deal was heard to be marketed with assumptions of 400 basis points over Libor and a 40% vol., according to a market source.

Using those assumptions, sources pegged the deal between 1.75 points and 1.875 points cheap at the midpoint of talk.

While the offering still looked cheap, the San Francisco-based enterprise identity provider was following a growing trend of software deals that have seen increasingly tighter pricing in recent weeks.

The serial issuer of convertible notes also hopped onto the bandwagon of companies taking advantage of current market conditions to repurchase or exchange a portion of their outstanding convertible notes.

Okta intends to enter into privately negotiated transactions with certain holders of its existing 0.25% convertible senior notes due 2023 to exchange a portion of the 2023 notes for cash and shares.

While Okta prepped its new offering, the company’s 0.125% convertible notes due 2025 were active.

The 0.125% notes were down about 3 points outright with stock off about 2%.

The notes were changing hands at 116.625 with about $8 million in reported volume, according to a market source.

Okta stock traded to a high of $187.99 and a low of $179.86 before closing the day at $180.07, a decrease of 2.73%.

Aptiv on deck

Aptiv plans to price $1 billion, or 10 million shares, of three-year par-of-$100 series A mandatory convertible preferred stock after the market close on Tuesday with price talk for a dividend of 5.25% to 5.75% and an initial conversion premium of 17.5% to 22.5%, according to a market source.

The deal was heard to be doing well during bookbuilding with books closing in the mid-afternoon.

Concurrently with the convertible preferred stock, the company plans to price a secondary offering of $1 billion in common stock.

Jazz Pharmaceuticals at par

Jazz Pharmaceuticals priced $850 million six-year exchangeable notes after the market close on Monday at the cheap end of talk with a coupon of 2% and an initial exchange premium of 40%.

Price talk was for a coupon of 1.5% to 2% and an initial exchange premium of 40% to 45%, according to a market source.

The notes were issued by subsidiary Jazz Investments I Ltd. and are exchangeable into the common shares of Jazz Pharmaceuticals.

The new 2% notes were in focus in the secondary space. However, they were largely trading flat, a source said.

The 2% notes were changing hands between 98.5 and 99.5 with stock down 1% to 3% early Tuesday, a source said.

They popped above par and were changing hands between 100 and 100.25 as stock improved.

The notes were moving largely in line on a dollar-neutral, or hedged, basis.

There was more than $94 million of the bonds on the tape by the late afternoon.

In connection with the new offering, Jazz repurchased $332.9 million of the principal amount of the company’s 1.875% exchangeable notes due 2021 for $332.9 million in cash.

Jazz’s 1.875% notes due 2021 and 1.5% exchangeable notes due 2024 were active in the secondary space on Wednesday.

The 1.875% notes had several prints at par, which was their buyback price.

The 1.5% notes were changing hands at 91.75 versus an equity price of $112.00, according to a market source.

The 1.5% notes saw about $10 million in reported volume by the late afternoon

Jazz stock traded to a low of $108.09 and a high of $113.94 before closing the day at $113.05, an increase of 1.58%.

Glaukos volatile

Glaukos sold an upsized $250 million of seven-year convertible notes after the market close on Monday at par at the midpoint of talk with a coupon of 2.75% and an initial conversion premium of 30%.

Price talk was for a coupon of 2.5% to 3% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

The 2.75% notes were volatile on debut.

They traded as low as 97.75 shortly after the opening bell. “It was probably just some flippers getting out,” a market source said.

They popped back up above par and were changing hands around 100.25 with stock down a little more than 3% early in the session.

However, the notes dipped back below par as the losses mounted for the stock.

The 2.75% notes were changing hands around 99.25 with stock off more than 4% in the late afternoon.

While down outright, the notes expanded about 2 points dollar-neutral, a source said.

Glaukos stock traded to a low of $40.50 and a high of $42.37 before closing the day at $40.73, a decrease of 5.61%.

Mentioned in this article:

Aptiv plc NYSE: APTV

Coupa Software Nasdaq: COUP

Glaukos Corp. NYSE: GKOS

Jazz Pharmaceuticals plc Nasdaq: JAZZ

Okta Inc. Nasdaq: OKTA

WisdomTree Investments Inc. Nasdaq: WETF

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.