SailPoint convertibles in focus on acquisition; VNET gains; Hannon Armstrong comes in

By Abigail W. Adams

Portland, Me., April 11 – It was a quiet start to the holiday truncated week in the convertibles secondary space as equity markets extended declines.

The Dow Jones industrial average closed down 413 points, or 1.19%, the S&P 500 index closed down 1.69%, the Nasdaq Composite closed down 2.18%, and the Russell 2000 index closed down 0.71%.

The market continued to feel heavy with several names weaker as selling pressure continued, sources said.

However, trading activity was muted with $50 million in reported convertibles trading volume about one hour into the session and $250 million on the tape about one hour before the market close.

Topical news was the main driver of trading activity in the space with merger and acquisition chatter, both actual and rumored, abounding.

SailPoint Technologies Holdings Inc.’s 0.125% convertible notes due 2024 were in focus with the notes surging outright on news the company would be taken private in an acquisition.

VNET Group, Inc.’s 0% convertible notes due 2026 were also making large outright gains following news the Beijing-based internet data center service provider had received an unsolicited takeout bid.

While the rumors did little to move the company’s convertible notes, Affirm Holdings Inc. was also the subject of takeover speculation.

Hannon Armstrong Sustainable Infrastructure Capital Inc.’s 0% green exchangeable notes due 2025 were down slightly on an outright and dollar-neutral basis.

SailPoint’s acquisition

SailPoint’s 0.125% convertible notes due 2024 were in focus on an otherwise quiet day in the convertibles secondary space with the notes surging outright on news the company would be taken private in an acquisition.

The 0.125% convertible notes shot up 45 points to double par.

The notes were changing hands at 226.75 versus an equity price of $63.91 early in the session, according to a market source.

They were changing hands at 227.25 in the late afternoon.

There was about $18 million in reported volume.

While the notes surged on an outright basis, the notes were unchanged to slightly weaker dollar-neutral, a source said.

While outright accounts would have been the primary benefactors of the takeout, holders of the 0.125% convertible were mostly hedge accounts due to their high dollar price.

SailPoint’s stock traded to a high of $64.39 and a low of $63.77 before closing the day at $64.03, an increase of 29.12%.

News broke early Monday that private equity firm Thoma Bravo would acquire the cyber security company for $65.25 per share in a deal valued at $6.9 billion.

The deal is expected to close in the second half of 2022.

VNET’s acquisition bid

VNET’s 0% convertible notes due 2026 were making large outright gains in active trading following news the company had received a non-solicitated takeover bid.

The 0% notes jumped about 4 points outright as the company’s equity jumped almost 30%.

The notes were changing hands at 89.75 versus an equity price of $6.66 early in the session, according to a market source.

However, they came in as the session progressed to change hands at 88.75.

VNET’s American Depositary Shares traded to a low of $6.03 and a high of $7.28 before closing the day at $7, an increase of 29.63%.

News broke on Monday that the Beijing-based internet data center service provider had received an unsolicited proposal from the Hina Group and Industrial Bank Co., Ltd. to acquire the company for $8 per ADS.

The offer was “a head scratcher,” a source said.

While VNET acknowledged the offer, it has not made any decision regarding it and there is no guarantee the proposal will result in a definitive offer, the company said in a news release.

Affirm’s acquisition rumor

Affirm was also the subject of takeout speculation on Monday although the news did little to move the company’s stock or convertible notes.

Affirm’s 0% convertible notes due 2026 were largely flat in light volume.

The notes continued to trade between 68.5 and 69.

Affirm’s stock traded to a high of $39.52 and a low of $35.68 before closing the day at $37.70, an increase of 0.32%.

The buy now, pay later firm has also attracted takeover speculation with the company’s stock badly battered in the run on growth stocks and companies that went public through SPACs.

However, the market was not giving credence to the speculation.

Takeover rumors become common for companies with beaten down stocks, a source said.

Hannon comes in

Hannon Armstrong’s 0% green exchangeable notes due 2025 were giving back their gains their second day in the secondary space.

The 0% notes were marked at 99.5 bid, par offered on Monday afternoon.

They contracted about 0.25 point dollar-neutral, a source said.

Hannon Armstrong’s stock traded to a high of $44 and a low of $42.07 before closing the day at $42.59, a decrease of 0.51%.

The 0% convertible notes closed last Friday above par and were flat to expanded 0.25 point dollar-neutral, a source said.

Hannon Armstrong priced a $200 million issue of the 0% green exchangeable notes with a redemption price of 110.15 for an accretion rate of 3.25% on April 7.

Mentioned in this article:

Affirm Holdings Inc. Nasdaq: AFRM

Hannon Armstrong Sustainable Infrastructure Capital Inc. NYSE: HASI

SailPoint Technologies Holdings Inc. NYSE: SAIL

VNET Group, Inc. Nasdaq: VNET

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