New issues mixed; Super Micro convertibles gain; Sunrun ‘clobbered’; Lyft, Parsons up

By Cristal Cody

Tupelo, Miss., Feb. 23 – Secondary trading ramped up in the convertibles market on Friday in the wake of a handful of new deals.

New issues from Super Micro Computer Inc., Sunrun Inc. and Lyft Inc. priced after the market closed on Thursday, along with a greenshoe exercised from Parsons Corp.

“Sunrun just got clobbered,” a source said. “The other ones hung in there.”

Traders poured into Super Micro Computer’s 0% convertible senior notes due March 1, 2029 with $238 million-plus of volume by late morning.

The issue accounted for over half of the $413 million of secondary volume seen overall in the convertibles market just before 11 a.m. ET., a source said.

Super Micro Computer’s notes were climbing over 2 points higher than issuance on a 102 handle.

Sunrun’s 4% convertible senior notes due March 1, 2030 sank once the deal broke in the secondary market.

The bonds dropped over 3 points from where the issue priced late Thursday.

“The disaster of the day was definitely Sunrun,” a source said. “The stock just got clocked.”

Sunrun’s deal had some issues from the get-go Thursday.

“It was priced originally at par, and then it was repriced down, and it’s just gotten nowhere,” a source said.

Meanwhile, Lyft’s new 0.625% convertible senior notes due March 1, 2029 traded more than 2 points better on Friday.

“With the stock unchanged, the bonds popped up about 2.5 points,” a source said.

Parsons’ 2.625% notes due March 1, 2029 also were quoted Friday higher in light trading after the issuer exercised a $100 million greenshoe on its Wednesday sale of 2.625% convertible senior notes due 2029.

The issue mostly was “put away before it hit the tape,” a source said.

Stock indices were mixed by late morning and closed mixed.

The S&P 500 index closed up 0.03%, the Dow Jones industrial average rose 0.16%, the Nasdaq fell 0.28% and the Russell 2000 closed up 0.14%.

Super Micro paper climbs

Super Micro Computer’s 0% convertible senior notes due 2029 climbed to 102.355 with an equity price of $880.75 on more than $238 million of secondary trading by late morning, a source said.

The company sold $1.5 billion of the notes after the market closed on Thursday at par with an initial conversion premium of 37.5%.

The notes priced at the midpoint of talk for a premium of 35% to 40% and at the rich end of talk for a coupon of 0% to 0.5%.

The Rule 144A offering from the San Jose, Calif.-based information technology company carries a 13-day greenshoe of $225 million.

Super Micro Computer’s shares slid over 12% early Friday to $854.50 and closed the day down 11.84% at $860.01.

Sunrun slides

Sunrun’s 4% convertible senior notes due 2030 were quoted much weaker at 94.25 with an equity price of $12.28 early Friday, a source said.

Volume was heavy on $49.5 million of trading just before 11 a.m. ET.

Sunrun priced $475 million of the six-year convertible notes at 99.75 on Thursday.

Coupon talk was 3.5% to 4%.

The initial conversion premium priced at 27.5%, at the cheap end of talk of 27.5% to 32.5%.

The Rule 144A offering has a 13-day greenshoe of $75 million.

Sunrun also announced it is repurchasing a portion of its 0% convertible notes due 2026 in privately negotiated transactions for a purchase price of 85.5.

The San Francisco-based residential solar panel company’s stock was down almost 5% at $12.18 early Friday. Shares closed off 6.89% at $11.90.

Lyft improves

Lyft’s 0.625% convertible senior notes due March 1, 2029 traded up about 2.5 points at around 102.5 on Friday, a source said.

The issue was seen late Friday morning at 102.677 with an equity price of $16.06 on $8 million of volume.

Lyft sold $400 million of the five-year convertible notes with an initial conversion premium of 32.5% after the market closed on Thursday.

Pricing came at the rich end of talk for a coupon 0.625% to 1.125% and an initial conversion premium of 27.5% to 32.5%.

The Rule 144A deal carries a 13-day greenshoe of $60 million.

If the greenshoe is exercised, the company plans to enter into additional capped call transactions.

The San Francisco-based ridesharing company’s stock ended 0.63% higher on the day at $16.01.

Parsons stronger

Parsons’ 2.625% notes due March 1, 2029 were quoted late Friday morning at 104.877 versus an equity price of $78.49 on $4.2 million of volume.

Parsons’ $100 million greenshoe exercised on its Wednesday sale of 2.625% convertible senior notes due 2029 was largely “put away before it hit the tape,” a source said.

Parsons announced the full $100 million greenshoe was exercised on its 2.625% convertible senior notes due 2029.

The total size of the issue is now $800 million.

Parsons is a Chantilly, Va.-based technology company serving the defense, intelligence and critical infrastructure markets.

Mentioned in this article:

Lyft Inc. Nasdaq: LYFT

Parsons Corp. NYSE: PSN

Sunrun Inc. Nasdaq: RUN

Super Micro Computer Inc. Nasdaq: SMCI

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