Morning Commentary: Workiva refinancing deal on deck in convertibles primary market

By Abigail W. Adams

Portland, Me., Aug. 14 – The convertibles primary market launched what sources have heard will be another active week with one refinancing deal on deck.

Workiva Inc. plans to price $525 million of five-year convertible notes after the market close on Monday with price talk for a coupon of 1% to 1.5% and an initial conversion premium of 27.5% to 32.5%.

The deal was heard to be in the market with assumptions of 275 basis points over SOFR and a 37% vol.

While the credit spread seemed somewhat aggressive, credit spreads are also near their tightest of the year, a source said.

Using the underwriter’s assumptions, the deal looked about 1 point cheap at the midpoint of talk.

However, as with most refinancing deals, the real value will be in Workiva’s buyback of its outstanding notes.

Workiva will enter into privately negotiated transactions with holders of its 1.125% notes due 2026 to repurchase a portion of the outstanding amount for cash.

The 1.125% notes are in-the-money and trading about 17 points above parity with some round-lot trades at 141.25 early in the session, a source said.

While market players eyed Workiva’s new offering, the secondary space was quiet with few names on the tape on another mixed open for equity markets.

The Dow Jones industrial average was up 8 points, or 0.03%, the S&P 500 index was up 0.38%, the Nasdaq Composite index up 0.72% and the Russell 2000 index was down 0.78% shortly before 11 a.m. ET.

There was $43 million of convertibles trading on the tape with no name seeing more than $5 million in reported volume.

© 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.