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Morning Commentary: Guidewire, Etsy continue to dominate the convertibles space
By Abigail W. Adams
Portland, Me., March 12 – New paper from Guidewire Software Inc. and Etsy Inc. continued to dominate trading activity in the secondary market early in Monday’s session with overall trading volume light. “It’s the typical Monday,” a market source said.
However, Guidewire’s 1.25% convertible notes due 2025 and Etsy’s 0% convertible notes due 2023 made up about 30% of the total trading volume.
Etsy was seen trading up to 102.5 to 103.5 early Monday with a good size volume, a market source said. Etsy stock was up to $28.08, an increase of 0.54%.
Guidewire’s 1.25% convertible notes were trading in the 101.25 to 101.5 range with stock up slightly, a market source said. Guidewire stock was up to $88.17, an increase of 0.25%, early in the session.
Guidewire was priced with a higher coupon than other software companies that have priced recent deals, such as RingCentral’s 0% convertible notes due 2023, Okta Inc.’s 0.25% convertible notes due 2023 or Q2 Holdings Inc.’s 0.75% convertible notes due 2023.
“It’s almost laughable that some would think a 1.25% coupon was high,” a market source said. The low volatility of the stock was the reason for the higher coupon. “It basically comes down to volatility,” the source said.
Both Etsy and Guidewire made their market debut on Friday. Etsy was priced with an issue price of 99.
RingCentral’s 0% convertible notes were last seen trading on Friday at 101.75 versus an equity price $65.66.
Q2 Holdings’ 0.75% convertible notes were last seen trading on Friday at 105 versus an equity price of $48.00.
Okta’s 0.25% convertible notes were last seen trading Friday at 108.67 versus an equity price of $40.45.
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