Morning Commentary: Alteryx, New Relic convertible offerings eyed; Twilio, Vocera hit the market

By Abigail W. Adams

Portland, Me., May 15 – The primary market kickstarted activity in the convertibles space with $600 million of new paper from Twilio Inc. and Vocera Communications, Inc. hitting the market on Tuesday and $635 million of new paper from New Relic Inc. and Alteryx, Inc. set to price after the market close.

While new paper from Twilio and Vocera dominated secondary trading on their market debut, they had mixed results with Twilio seen slightly expanded and Vocera slightly contracted on a dollar-neutral basis.

Reviews of the new deals in the works were also mixed. While New Relic’s offering looks cheap based on the underwriters’ assumptions, Alteryx is “not looking great,” a market source said.

Twilio in demand

Twilio priced an upsized $475 million of five-year convertible notes after the market close on Monday with a coupon of 0.25% and an initial conversion premium of 35%.

Pricing came at the mid-point of talk for a coupon of 0% to 0.5% and at the rich end of talk for an initial conversion premium of 30% to 35%, according to a market source.

The greenshoe was also upsized to $75 million.

The initial size of the deal had been $435 million with a greenshoe of $65 million.

The deal was more than 2 times oversubscribed during the subscription process, a market source said.

The new paper “was trading like crazy,” a market source said early in the session.

The notes were seen trading between 100.5 to 100.75 with stock largely flat to up slightly. They were slightly expanded dollar neutral, a market source said.

Vocera below par

Vocera Communications priced $125 million of five-year convertible notes after the market close on Monday at the mid-point of talk with a coupon of 1.5% and an initial conversion premium of 32.5%.

Price talk had been for a coupon of 1.25% to 1.75% and an initial conversion premium of 30% to 35%, according to a market source.

The notes were trading below par on their market debut.

The convertibles were seen trading between 99.5 to 99.75 with stock down 5 to 10 cents. They were contracted about 0.25 point dollar neutral, a market source said.

Alteryx ‘not looking great’

Alteryx plans to price $200 million of five-year convertible notes after the market close on Tuesday with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 42.5% to 47.5%.

The deal is being marketed with a credit spread of 275 basis points over Libor and a 45% vol., a market source said. At the mid-point of talk, the deal models about 2 points rich, the source said.

“It’s not looking great,” the source said. “There’s a lot of premium there.”

New Relic

New Relic plans to price $435 million of five-year convertible notes after the market close on Tuesday with price talk for a coupon of 0.25% to 0.75% and an initial conversion premium of 25% to 30%, according to a market source.

The deal is being marketed with a credit spread of 225 bps over Libor and a 35% vol., a market source said. At the mid-point of talk, the deal models about 1.5 points cheap, a market source said.

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