Apptio convertibles on tap; Guidewire, Zendesk waver below par; Exact Sciences down

By Abigail W. Adams

Portland, Me., March 19 – The secondary market in the convertibles world saw light trading volume on Monday, which sources attributed to the volatility that was once again striking the equity markets.

However, the volatility in equities did not stop the primary market from preparing a new deal.

Apptio Inc. plans to price $125 million of five-year convertible notes after the market close on Tuesday with price talk for a coupon of 0.875% to 1.375% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

Goldman Sachs & Co., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC are lead bookrunners for the Rule 144A deal, which carries a greenshoe of $18.75 million.

In connection with the pricing, Apptio will enter into capped call transactions.

Proceeds will be used to cover the cost of the call spread and for general corporate purposes.

While still among the top names traded on Monday, trading activity surrounding new paper from Zendesk Inc. and Live Nation Entertainment, Inc., which debuted on Friday, was slow on Monday.

Live Nation’s new 2.5% convertible notes due 2023 saw the heaviest trading volume during Monday’s session. There was a “whopping” $3 million on the tape early in the session, a market source said.

“That kind of tells you where we’re at,” the source said. “Ultimately, they’ll do well but there’s not much going on there this morning.”

Trading picked up later in the session with about $12.25 million of the new 2.5% notes on the tape by the late afternoon. The notes continued to trade just under 102.

There was only one print seen on the tape for Zendesk’s new 0.25% convertible notes due 2023 early in the session. There was about $8 million on the tape by late afternoon with the 0.25% notes dipping below par.

Guidewire Software Inc.’s recently priced 1.25% notes due 2025 also dipped below par during Monday’s session with its equity also down.

The announcement of a new celebrity spokesperson on Monday did little to improve Exact Sciences Corp.’s 1% convertible notes due 2025.

The 1% notes dropped 4 points outright to return to the 94 range with the stock down almost 8%.

While the convertibles space was quiet on Monday, with most of the names that did trade down on an outright basis, equities launched a tumultuous start to the week.

The Dow Jones industrial average closed Monday down 335 points, Nasdaq closed Monday down 1.84%, and the S&P 500 closed Monday down 1.42%.

“That seems to be what happens when the market is down,” a market source said. “When volatility picks up like this, converts tend to hold back and let the insanity reign in equities.”

Live Nation day two

The darling of the convertibles world on Friday saw limited trading activity on Monday.

Live Nation’s new 2.5% convertible notes due 2023 saw $12.25 million on the tape by late afternoon, according to market sources.

While trading volume of the new notes was light, Live Nation was still the most actively traded on Monday. The new 2.5% notes were seen trading just under 102 early in the session.

The 2.5% notes were seen trading at 101.685 versus an equity price of $43.99 later in the afternoon.

Live Nation priced $500 million of the 2.5% convertible notes after the market close March 15. The notes dominated trading activity on their debut March 16 with “big players” creating positions, a market source previously said.

Wavering at par

Zendesk’s new 0.25% convertible notes due 2023 wavered between just above par and just below par their second full trading day. While also heavily traded on their market debut on Friday, trading volume was light on Monday.

The new 0.25% notes were seen trading at 100.875 early in the session. They dropped below par later in the afternoon and were seen trading at 99.885 versus an equity of $45.29.

Zendesk priced $500 million of the five-year convertible notes prior to the market open on Friday.

Guidewire’s recently priced 1.25% convertible notes due 2025 also wavered between just above and just below par during Monday’s session.

The 1.25% notes spent the majority of Monday’s session just below par but was bumped back up to just north of par before Monday came to a close.

While Guidewire stock was down 2.27% at its lowest point on Monday, it closed the day at $84.87, a decrease of 0.07%.

Guidewire priced an upsized $360 million in the 1.25% notes on March 9. The notes were wrapped around 101 for most of last week.

Exact Sciences drops

The announcement of a new celebrity spokesperson on Monday did little to improve the status of Exact Sciences’ 1% convertible notes due 2025. The 1% notes were among the most actively traded during Monday’s session.

They dropped about 4 points outright to return to just north of 94 after rallying last week to trade up to their issue price of 98.75. Exact Sciences closed Monday at $48.46, a decrease of 7.82%.

Exact Sciences announced on Monday Harry Connick Jr. and wife Jill Connick will be the celebrity spokespeople for a new education campaign to encourage people over the age of 50 to get screened for colorectal cancer.

Cologuard, a colorectal screening product, is Exact Sciences’ only product on the market.

Mentioned in this article:

Apptio Inc. Nasdaq: APTI

Exact Sciences Corp. Nasdaq: EXAS

Guidewire Software Inc. NYSE: GWRE

Live Nation Entertainment, Inc. NYSE: LYV

Zendesk Inc. NYSE: ZEN

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