Etsy, SailPoint deals join primary calendar as Fed cuts rates; new PTC Therapeutics adds

By Rebecca Melvin

New York, Sept. 18 – Etsy Inc. and SailPoint Technologies Holdings Inc. announced new convertibles offerings after the market close on Wednesday and investors bought the new PTC Therapeutics Inc. notes in a session during which U.S. stocks pushed higher after the Federal Reserve cut interest rates by 0.25%.

Etsy planned to price a hefty $650 million deal of seven-year convertible notes after the market close. The terms were fixed at a 0.125% coupon and a 47.5% initial conversion premium.

According to a New York-based market source, the notes model with a fair value of 100.86 at those terms using a credit spread of 225 basis points over Libor and a 45% vol.

The Etsy notes are non-callable for life and were being sold via active bookrunners J.P. Morgan Securities LLC, Goldman Sachs & Co. LLC and Barclays.

The existing Etsy 0% notes due 2023 were seen in trade on Wednesday at 173 and 173.55.

SailPoint plans to price $300 million of five-year convertible notes that were being talked to yield 0.125% to 0.625% with an initial conversion premium of 32.5% to 37.5%. Terms are expected to be set on Thursday.

The Rule 144A deal has a $50 million greenshoe, and this paper is non-callable for three years and provisionally callable for two years if shares exceed 130% of the conversion price.

The company plans to enter into capped call transactions with initial purchasers of the notes.

A portion of the proceeds will be used to pay the cost of capped call transactions. Remaining proceeds will be for general corporate purposes, including working capital, operating expenses and capital expenditures.

The cybersecurity software company is based in Austin, Tex.

PTC Therapeutics’ newly priced 1.5% convertibles were higher outright and on swap after the New Jersey-based biopharmaceutical company priced $250 million of the seven-year paper at the cheap end of talk.

Investors turned sellers of PTC common shares after the overnight convertibles deal priced. Shares fell $5.16, or nearly 12%, to $38.16. Despite the slide, the convertibles moved up to 101 on an outright basis.

Pricing of the new PTC bonds came at the cheap end of talked terms for a coupon of 1% to 1.5% and an initial conversion premium of 30% to 35%.

The company was also pricing $100 million of common stock at a share price talked at $40.30 to $41.30. But the convertible note is not contingent upon the common stock offering pricing.

PTC’s existing 3% convertibles due 2022 were down at 106 to 107, which was down from pricing seen in August at 112 to 114.5.

Meanwhile, Adesto Technologies Corp. was in focus after the Santa Clara, Calif.-based tech company announced a $70 million offering of five-year convertible senior notes.

Those notes were seen very cheap at the midpoint of price talk on assumptions that were floated of a credit spread of 800 bps over Libor and a 40% vol.

The planned notes were talked to yield 4.25% to 4.75% with an initial conversion premium of 27.5% to 32.5%.

Western Digital Corp. was also in trade on Wednesday. The 1.5% convertibles due 2024 traded actively at about 96.5, which was off by a little less than half a point. The shares of the San Jose, Calif.-based computer hard disk drive maker traded off 35 cents, or 0.6%, to $63.56.

The Federal Reserve cut its benchmark interest rate by 0.25 point on Wednesday at the conclusion of its two-day meeting. It was the second cut following a policy of easing and accommodation that kicked in with the 2008 financial crisis.

The policy makers left the door open to additional cuts, but Wednesday’s decision was split, with seven assenting and three dissenting, contributing to uncertainty about the future direction of policy. Meanwhile the global economic outlook was also uncertain with international trade a top concern. Fed chairman Jerome Powell attributed the economic risk to trade factors.

Mentioned in this article:

Adesto Technologies Corp. Nasdaq: IOTS

Etsy Inc. Nasdaq: ETSY

PTC Therapeutics Inc. Nasdaq: PTCT

Western Digital Corp. Nasdaq: WDC

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