Akamai convertibles flat on debut; Workiva moves lower; Lumentum mixed pre-earnings

By Abigail W. Adams

Portland, Me., Aug. 16 – It was another active day in the convertibles secondary space as $1.1 billion in new paper entered the market.

Akamai Technologies Inc. priced an upsized $1.1 billion of long five-year convertible notes after the market close on Tuesday.

The new paper hit the market on a red day for equities with indexes mixed early in the session but closing in the red following the release of the Federal Open Market Committee’s July minute notes.

The Dow Jones industrial average closed Wednesday down 181 points, or 0.52%, the S&P 500 index closed down 0.76%, the Nasdaq Composite index closed down 1.15% and the Russell 2000 index closed down 1.05%.

There was $134 million in reported volume about one hour into the session and $713 million on the tape about one hour before the market close with Akamai’s new notes accounting for about ¼ of the activity in the space.

The new notes saw a lackluster start in the aftermarket with the notes falling flat on an outright and dollar-neutral basis.

Workiva Inc.’s 1.25% convertible notes due 2028 continued to disappoint their second day in the secondary space with the notes moving lower outright and contracting dollar-neutral.

Lumentum Holdings Inc.’s convertible notes were mixed as stock dived ahead of the company’s earnings report with its short duration notes expanding as its most recently priced notes contracted.

Akamai flat

Akamai priced an upsized $1.1 billion of long five-year convertible notes after the market close on Tuesday at par with a coupon of 1.125% and an initial conversion premium of 22.5%.

The notes priced at the rich end of talk for a coupon of 1.125% to 1.625% and at the cheap end of talk for an initial conversion premium of 22.5% to 27.5%.

The greenshoe was also upsized to $165 million.

The initial size of the offering was $1 billion with a greenshoe of $150 million.

While the deal modeled cheap, the new paper fell flat on its aftermarket debut.

The 1.125% notes due 2029 were par bid, 100.25 offered on swap prior to the market open, a source said.

They saw little improvement as the session progressed with the notes trading in the 99.5 to par context in heavy volume.

The notes were marked at par versus a stock price of $102.40 about one hour into the session and were changing hands at 99.875 versus a stock price of $102.29 in the late afternoon.

The notes were flat on hedge, sources said.

There was $172 million in reported volume.

Akamai’s stock traded to a high of $102.92 and a low of $101.52 before closing at $101.68, down 1.39%.

Workiva lower

Workiva’s 1.25% convertible notes due 2028 continued to move lower their second day in the secondary space with the notes breaking below a 98-handle and contracting dollar-neutral.

The 1.25% convertible notes traded as low as 97.375 pre-open and were seen at 98 versus a stock price of $98.67 about one hour into Wednesday’s session, a source said.

They fell to 97.5 in the late afternoon despite a green day for the company’s stock.

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

There was $10 million in reported volume.

Workiva’s stock traded to a low of $97.48 and a high of $99.92 before closing at $97.50, off 0.51%.

Workiva’s 1.25% convertible notes struggled on their aftermarket debut on Tuesday with the notes trading well below par and falling flat dollar-neutral.

Lumentum mixed

Lumentum’s convertible notes were mixed as stock fell double digits on the eve of the company’s earnings report.

The optical and photonic products manufacturer’s short-duration 0.25% convertible notes due 2024 improved dollar-neutral on the move down.

The convertibles were changing hands at 99.75 versus a stock price of $45.97 in the late afternoon. They gained 0.25 to 0.5 point on hedge, a source said.

There was $14 million in reported volume.

While volume in the issue was thin, Lumentum’s most recently priced 1.5% convertible notes due 2029 were weaker on hedge.

The notes were off 4 points outright to close the day wrapped around 92.

The notes contracted about 0.25 to 0.5 point on the move down, a source said.

Lumentum’s stock traded to a low of $45.07 and a high of $49.44 before closing at $46.81, a decrease of 8.82%.

Stock sank in sympathy with industry peer Coherent Corp., which saw its equity drop about 30% after earnings.

Lumentum is scheduled to release earnings prior to the market open on Thursday.

Mentioned in this article:

Akamai Technologies Inc. Nasdaq: AKAM

Lumentum Holdings Inc. Nasdaq: LITE

Workiva Inc. NYSE: WK

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