Morning Commentary: Upstart Holdings, Opendoor convertible notes in focus in primary

By Abigail W. Adams

Portland, Me., Aug. 17 – The convertibles primary market saw an active start to the week with two large offerings set to price after the market close on Tuesday.

Upstart Holdings Inc. plans to price $575 million of five-year convertible notes and Opendoor Technologies Inc. plans to price $750 million of five-year convertible notes after the market close.

While the deals modeled cheap based on underwriters’ assumptions, the terms remained aggressive with both deals eyeing 0% coupons.

Upstart eyed

Upstart Holdings plans to price $575 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 was in the market with assumptions of 300 basis points over Libor and a 42% vol., according to a market source.

Using those assumptions, the deal looked 1.55 points cheap at the midpoint of talk.

Upstart Holdings’ stock skyrocketed after blowing away analyst expectations in its second-quarter earnings report on Aug. 10.

Stock gained almost 50% in a single week and hit a new 52-week high of $213.90 on Monday.

Opendoor eyed

Opendoor Technologies plans to price $750 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 30% to 35%.

The deal was heard to be in the market with assumptions of 450 bps over Libor and a 45% vol.

Using those assumptions, the deal looked 2.55 points to 2.59 points cheap at the midpoint of talk, sources said.

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