Morning Commentary: Opendoor flat, Upstart Holdings convertibles skyrocket on debut

By Abigail W. Adams

Portland, Me., Aug. 18 – New paper was in focus in the convertibles market on Wednesday as $1.425 billion in new supply flooded the secondary space.

Opendoor Technologies Inc. priced an upsized $850 million offering of five-year convertible notes and Upstart Holdings Inc. priced $575 million of five-year convertible notes after the market close on Tuesday.

The new paper had mixed performances on debut with Upstart Holdings skyrocketing on an outright and dollar-neutral basis and Opendoor falling flat.

Opendoor

Opendoor Technologies priced an upsized $850 million offering of five-year convertible notes after the market close on Tuesday at par with a coupon of 0.25% and an initial conversion premium of 30%.

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

The new paper fell flat in the aftermarket.

It traded as low as 98 soon after the opening bell with stock off. However, the notes returned to par as stock recovered.

They were trading flat dollar-neutral.

“Nothing exciting there,” a source said.

Opendoor’s stock was changing hands at $14.66, a decrease of 0.88%, shortly before 11 a.m. ET.

Upstart

Upstart Holdings priced $575 million of five-year convertible notes after the market close on Tuesday at par with a coupon of 0.25% and an initial conversion premium of 42.5%.

Pricing came at the midpoint of talk for a coupon of 0% to 0.5% and at the cheap end of talk for an initial conversion premium of 42.5% to 47.5%, according to a market source.

The new paper skyrocketed on an outright and dollar-neutral basis early in the session.

The notes traded up to 106 with stock up more than 7%.

They expanded upwards of 4 points dollar-neutral, a source said.

Upstart Holdings’ stock was trading at $217.70, an increase of 8.75%, shortly before 11 a.m. ET.

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