Zendesk, LivaNova convertibles hit aftermarket, trade up on debut; Coupa tops par

By Abigail W. Adams

Portland, Me., June 12 – The convertibles primary market rounded out another multi-billion-dollar week with $1.25 billion pricing over two deals late Thursday.

Zendesk Inc. priced $1 billion of five-year convertible notes and LivaNova plc sold $250 million of long five-year exchangeable notes after the market close on Thursday.

The two deals brought the weekly tally to $5.98 billion, which priced over 10 deals.

The deals were marketed on one of the ugliest days for equities since March and priced at the cheap end of talk.

However, they were still able to clear the primary market.

The new paper hit the secondary space on a volatile day for equities with equity markets strong at the opening but drifting into negative territory at the market close.

While Zendesk was strong out of the gate, the notes came in and were trading around par as the session progressed. However, they were expanding dollar-neutral.

LivaNova was putting in a strong performance on an outright and dollar-neutral basis.

Meanwhile, Coupa Software Inc.’s newly priced 0.375% convertible notes due 2026 traded back up to par their second day in the secondary space.

However, Jazz Pharmaceuticals plc’s 2% exchangeable notes due 2026 dropped further below par during Friday’s session.

Zendesk expands

Zendesk priced $1 billion of five-year convertible notes after the market close on Thursday at par with a coupon of 0.625% and an initial conversion premium of 32.5%.

Pricing came at the cheap end of revised talk for a coupon of 0.375% to 0.625% and in line with revised talk for an initial conversion premium of 32.5%, according to a market source.

Initial price talk was for a coupon of 0.125% to 0.625% and an initial conversion premium of 32.5% to 37.5%.

The 0.625% notes dominated activity in the secondary space.

There was $66 million in reported volume about one hour into the session and $113 million in the late afternoon.

The notes started the day strong on an outright basis but came in as the session progressed.

However, they expanded dollar-neutral.

The notes were changing hands at 101.375 about one hour after the opening bell, according to a market source.

They dropped down to 100 bid, 100.5 offered in the late afternoon.

The notes were up 1.5 points to 2 points on hedge based on the stock reference price of $82.085, which was the VWAP from June 11, sources said.

They were up about 0.625 point dollar-neutral based off of Zendesk’s closing stock price on June 11, another source said.

The deal “wasn’t a barn burner,” a source said, with the market experiencing some new issue fatigue.

Zendesk stock traded to a low of $77.77 and a high of $82.98 before closing the day at $80.11, an increase of 0.48%.

Zendesk entered into privately negotiated transactions to repurchase $425.8 million of the principal amount of its 0.25% convertible notes due 2023 for $617.6 million in cash.

There were several prints of the 0.25% notes at 145.045 prior to the market open on Friday, which appeared to be their buyback price, a source said.

LivaNova trades up

LivaNova priced $250 million of long five-year exchangeable notes after the market close on Thursday at par at the cheap end of talk with a coupon of 3% and an initial exchange premium of 30%.

Price talk was for a coupon of 2.5% to 3% and an initial exchange premium of 30% to 35%, according to a market source.

The new paper traded up to 103.75 early in the session.

They continued to climb and were seen trading at 105 in the late afternoon.

The notes expanded 2 to 2.5 points dollar-neutral, sources said.

However, volume in the issue was light with only $17 million on the tape about one hour before the market close.

LivaNova stock traded to a low of $45.97 and a high of $48.51 before closing the day at $47.56, an increase of 1.39%.

Coupa tops par

Coupa’s new 0.375% convertible notes due 2026 topped par their second day in the secondary space.

The notes were changing hands between 100 and 100.5 heading into the market close.

While up outright, the notes were moving in line dollar-neutral, a source said.

The 0.375% notes remained active with $31 million in reported volume by the late afternoon.

Coupa stock traded to a low of $216.58 and a high of $226.97 before closing the day at $224.01, an increase of 2.77%.

Coupa’s new 0.375% notes were trading on a 99-handle on their market debut on Thursday.

However, they expanded 0.5 point to 1.5 points dollar-neutral, sources said.

Jazz down again

Jazz Pharmaceuticals’ new 2% exchangeable notes due 2026 dropped further below par on Friday.

The notes traded down to 97 in the late afternoon with about $24 million in reported volume, according to a market source.

The notes were slightly contracted on a dollar-neutral basis, a source said.

Jazz stock traded to a low of $102.68 and a high of $109.72 before closing the day at $104.68, a decrease of 0.97%.

Stock has shaved off more than 5% since the notes priced at par on Monday.

Mentioned in this article:

Coupa Software Inc. Nasdaq: COUP

Jazz Pharmaceuticals plc Nasdaq: JAZZ

LivaNova plc Nasdaq: LIVN

Zendesk Inc. NYSE: ZEN

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