Morning Commentary: PAR Technology convertibles expand on debut; Weibo notes active

By Abigail W. Adams

Portland, Me., Feb. 6 – The second and most likely final new convertibles deal of the week hit the secondary space on Thursday.

PAR Technology Corp. priced an upsized $105 million of six-year convertible notes after the market close on Wednesday at par with a coupon of 2.875% and an initial conversion premium of 32.5%.

Pricing came at the midpoint of talk for a coupon of 2.625% to 3.125% and an initial conversion premium of 30% to 35%, according to a market source.

The greenshoe was also upsized to $15 million. The initial size of the deal was $90 million with a greenshoe of $13.5 million.

The new paper dominated activity in the secondary space with the notes seeing a large dollar-neutral expansion.

The 2.875% notes were changing hands as high as 102.25 with stock off more than 2% about one hour into Thursday’s session, according to a market source.

PAR stock was $31.77, a decrease of 2.07%, shortly before 11 a.m. ET.

While the offering was small, the deal modeled more than 3 points cheap based on underwriters’ assumptions, sources said.

Approximately $66.25 million of the proceeds will be used to deliver 722,423 shares of common stock to repurchase $66.25 million of its 4.5% convertible notes due 2024 in privately negotiated transactions.

Prior to the transaction, there were $80 million of the 4.5% convertible notes outstanding, according to Trace data.

While there was an anticipated pick-up in new deal activity with markets stabilizing from the coronavirus induced volatility, the pipeline was not as active as expected, a source said.

Meanwhile, the convertible notes of social media sites were in focus in the secondary.

Weibo Corp.’s 1.25% convertible notes due 2022 saw high-volume activity early in the session as the Beijing-based social media company’s equity posted nominal gains.

The 1.25% convertible notes were changing hands around 95.875 early in the session with about $10 million in reported volume, according to a market source.

Weibo’s ADS were changing hands at $45.22, an increase of 2.13%, early Thursday.

Weibo is popularly referred to as the Chinese Twitter Inc.

And Twitter’s 0.25% convertible notes due 2024 also saw high-volume activity as stock soared following its fourth-quarter earnings.

The 0.25% convertible notes jumped above par for the first time since October 2019.

The notes were up over 4 points outright. They were changing hands at 103.625 with stock up more than 15%.

Twitter stock jumped to $38.86, an increase of 16.45%, shortly before 11 a.m. ET.

Stock jumped following it’s fourth-quarter earnings report.

While the social media company missed on the bottom line, it beat on the top and reported strong user growth.

Twitter reported fourth-quarter earnings per share of 25 cents versus the 29 cents analyst expected.

However, revenue was $1.01 billion versus the $991.8 million expected by analysts.

Daily average users also grew 21%.

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