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Morning Commentary: Maxeon Solar upsizes convertibles; Palo Alto notes active early
By Abigail W. Adams
Portland, Me., July 10 – The convertibles primary market closed out a quiet week with one small offering pricing.
Maxeon Solar Technologies Pte. Ltd. priced an upsized $185 million of five-year convertible notes after the market close on Thursday at par at the cheap end of talk with a coupon of 6.5% and an initial conversion premium of 15%.
Price talk was for a coupon of 5.5% to 6.5% and an initial conversion premium of 15% to 25%, according to a market source.
While the deal was upsized, the greenshoe was downsized to $15 million.
The initial size of the offering was $175 million with a greenshoe of $26.25 million.
Maxeon is a wholly owned subsidiary of SunPower Corp. with plans to be spun off into an independent company.
The notes will be redeemed at 101 plus interest if the spinoff is not completed within three months of issuance.
The deal was largely unprecedented with the issuance of pre-IPO convertible notes rare and pre-IPO issuance from a spinoff even rarer, sources said.
The notes were not seen trading early in the session.
Meanwhile, the secondary space saw an active start to the day with $88 million in reported volume about one hour into the session, a market source said.
Tech names remained in focus and continued to gain.
Palo Alto Networks Inc.’s 0.375% convertible notes due 2025 were active early in the session.
The notes were changing hands at 104.75 with stock off early in the session.
About $8 million of the bonds were on the tape.
Palo Alto stock traded to a low of $245.23 shortly after the opening bell. However, stock bounced back and was changing hands at $247.96, a decrease of 0.25% shortly before 11 a.m. ET.
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