Morning Commentary: Super Micro attracts bulk of secondary action; Sunrun ‘clobbered’

By Cristal Cody

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

New issues from Lyft Inc., Super Micro Computer Inc. and Sunrun 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.

Meanwhile, Sunrun’s 4% convertible senior notes due March 1, 2030 sank on strong volume that hit nearly $50 million over the morning.

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

Stock indices were mixed by late morning.

The S&P 500 index edged down 0.05%, the Dow Jones industrial average rose 0.28%, the Nasdaq fell 0.43% and the Russell 2000 was 0.05% lower shortly before 11 a.m. ET.

SMCI 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.

Sunrun drops

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.

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