Morning Commentary: RealReal, Eventbrite, Coupa convertibles eyed; Okta, Aptiv gain

By Abigail W. Adams

Portland, Me., June 10 – The steady stream of new deals continued on Wednesday with the convertible primary market launching two new offerings prior to the market open.

The RealReal Inc. plans to price $125 million of five-year convertible notes, and Eventbrite Inc. plans to sell $115 million of long five-year convertible notes.

The new offerings join Coupa Software Inc.’s $1.1 billion megadeal on the forward calendar with all three slated to price after the market close.

Coupa will likely occupy the attention of most market players due to its size.

The offering looked cheap compared to other deals that have come from the sector recently, sources said.

As market players eyed the new deals in the pipeline, new paper from Okta Inc., Aptiv plc and WisdomTree Investments Inc. made their aftermarket debut.

Okta’s convertible notes and Aptiv’s mandatory convertibles were making gains in the secondary space.

Eventbrite eyed

Eventbrite plans to price $115 million long five-year convertible notes after the market close on Wednesday with price talk for a coupon of 4.5% to 5% and an initial conversion premium of 17.5% to 22.5%.

One source pegged assumptions for the deal from the self-servicing ticketing company at 1,700 basis points over Libor and a 40% vol.

Using those assumptions, the deal looked about 2.875 points cheap at the midpoint of talk.

The credit spread was based off the company’s new revolving credit facility, the source said.

RealReal on deck

The RealReal plans to price $125 million of five-year convertible notes after the market close on Wednesday with price talk for a coupon of 2.75% to 3.25% and an initial conversion premium of 25% to 30%.

Coupa looks cheap

Coupa plans to sell $1.1 billion of six-year convertible notes after the market close on Wednesday with price talk for a coupon of 0.125% to 0.625% and an initial conversion premium of 30% to 35%.

The deal was heard to be marketed with assumptions of 425 bps over Libor and a 40% vol., according to a market source.

Using those assumptions, the deal looked about 2.79 points cheap at the midpoint of talk.

The deal looked cheaper than some of the other offerings from the tech sector to come recently, a source said.

Coupa plans to repurchase a portion of its 0.375% convertible notes due 2023 for cash with proceeds from the new offering.

Okta expands

Okta priced $1 billion of six-year convertible notes after the market close on Tuesday at par with a coupon of 0.375% and an initial conversion premium of 32.5%.

Pricing came at the midpoint of talk for a coupon of 0.125% to 0.625% and at the cheap end of talk for an initial conversion premium of 32.5% to 37.5%, according to a market source.

While the notes were the most actively traded issue in the secondary space early Wednesday, they were quiet given the size of the issue.

Okta’s new 0.375% notes were changing hands around 100.5 with stock off about 0.5% early Wednesday.

The notes saw about $31 million in reported volume about one hour into the session.

Okta stock was changing hands at $179.78, a decrease of 0.16%, shortly before 11 a.m. ET.

Okta also entered into privately negotiated transactions with certain holders of its existing 0.25% convertible senior notes due 2023 to exchange approximately $69.9 million of the principal amount of the 2023 notes for 1.4 million shares and $200,000 in cash for accrued interest and premium to the conversion value of the notes, according to a company press release.

Aptiv gains

Aptiv priced $1 billion, or 10 million shares, of three-year par-of-$100 series A mandatory convertible preferred stock after the market close on Tuesday with a dividend of 5.5% and a threshold appreciation premium of 22.5%.

Pricing came at the midpoint of talk for a dividend of 5.25% to 5.75% and at the rich end of talk for a threshold appreciation premium of 17.5% to 22.5%, according to a market source.

The company also priced a concurrent $1 billion, or 13,173,495 share, offering of ordinary shares at a public offering price of $75.91.

The convertible preferreds jumped in active trading early Wednesday. They traded as high as 105 with stock up about 3.5% early in the session.

Aptiv stock was changing hands at $78.99, an increase of 4.07%, shortly before 11 a.m. ET.

WisdomTree prices

WisdomTree Investments priced $150 million of three-year convertible notes prior to the market open on Wednesday at par with a coupon of 4.25% and an initial conversion premium of 60%.

Pricing came at the cheap end of talk for a coupon of 3.75% to 4.25% and in line with talk for an initial conversion premium of 60%, according to a market source.

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