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Morning Commentary: Alphatec, Upwork convertible offering eyed; Fastly contracts
By Abigail W. Adams
Portland, Me., Aug. 5 – The convertible primary market returned to action after a nearly two-week hiatus with two new offerings on deck.
Alphatec Holdings Inc. plans to price $250 million in five-year convertible notes after the market close on Thursday with price talk for a coupon of 0.5% to 1% and an initial conversion premium of 30% to 35%, according to a market source.
The deal was heard to be in the market with assumptions of 500 bps over Libor and a 43% vol., according to a market source.
Using those assumptions, the deal looked 2.51 points cheap at the midpoint of talk.
In an overnight deal, Upwork Inc. plans to price $500 million in five-year convertible notes after the market close on Thursday with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 37.5% to 42.5%, according to a market source.
The deal was heard to be in the market with assumptions of 325 bps over Libor and a 42% vol.
Using those assumptions, the deal looked about 2.42 points cheap at the midpoint of talk, a source said.
Meanwhile, there was an uptick of activity in the secondary space as convertibles issuers saw huge stock moves following earnings.
Fastly Inc.’s 0% convertible notes due 2026 were in focus with the notes dropping on an outright and dollar-neutral basis as stock got pummeled following its earnings announcement.
The 0% convertible notes were down about 4 points outright with stock off more than 16%.
They were changing hands at 82.125 versus a stock price of $34.84 early in the session.
The notes contracted about 1 point dollar-neutral.
Fastly stock was changing hands at $36.73, a decrease of 17.76%, shortly before 11 a.m. ET.
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