Five9, Progress Software convertibles on deck; Super Micro Computer pulls back on hedge

By Abigail W. Adams

Portland, Me., Feb. 26 – The convertibles primary market saw an active start to the week with two new deals in the market.

Five9 Inc. plans to price $600 million of five-year convertible notes after the market close on Tuesday with price talk for a coupon of 1% to 1.5% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

Morgan Stanley & Co. LLC is lead left bookrunner for the Rule 144A offering, which carries a greenshoe of $90 million.

Progress Software Corp. plans to price $350 million of six-year convertible notes after the market close on Tuesday with price talk for a coupon of 3.5% to 4% and an initial conversion premium of 25% to 30%, according to a market source.

J.P. Morgan Securities LLC (lead left), BofA Securities Inc., Citigroup Global Markets Inc. and Wells Fargo Securities LLC are bookrunners for the Rule 144A offering, which carries a greenshoe of $52.5 million.

Meanwhile, the secondary space remained active with the almost $5 billion in new supply that priced the previous week continuing to drive volume in the space.

Equity indexes were mixed on Monday as markets stared down a heavy week of macro data with quarterly GDP figures out on Wednesday and the Personal Consumption Expenditure report due on Thursday.

The Dow Jones industrial average closed Monday down 62 points, or 0.16%, the S&P 500 index closed down 0.38%, the Nasdaq Composite index closed down 0.13% and the Russell 2000 index closed up 0.67%.

There was $100 million in reported convertible bond trading volume about one hour into the session and $451 million on the tape in the late afternoon.

Super Micro Computer Inc.’s 0% convertible notes due 2029 continued to dominate trading with the notes pulling back from their phenomenal dollar-neutral gains last Friday.

Parsons Corp.’s 2.625% convertible notes due 2029 remained active with buyers continuing to lift the notes.

However, activity in Lyft Inc.’s 0.625% convertible notes due 2029 slowed with the notes holding onto the large outright and dollar-neutral gains made on debut.

Sunrun Inc.’s 4% convertible notes due 2030 continued to struggle on Monday with the notes sinking lower outright after a disastrous trading debut.

Super Micro comes in

Super Micro’s 0% convertible notes due 2029 dominated trading.

While the notes added on an outright basis, they were coming in from the spectacular dollar-neutral gains made on debut.

The 0% notes were changing hands at 101.25 versus a stock price of $840.64 early in the session, according to a market source.

They were trading at 102.875 versus a stock price of $885.80 in the late afternoon.

The notes contracted 1 to 1.5 points on the move up, a source said.

There was $27 million in reported volume.

Super Micro’s stock leveled off after the phenomenal volatility of the past two trading sessions.

Stock traded to a low of $830.02 and a high of $895.96 before closing at $876.34, up 1.9%.

Super Micro’s stock deflated about 12% as the 0% convertible notes made their aftermarket debut last Friday.

The notes logged dollar-neutral gains of 7 to 7.5 points on the stock move last Friday, a source said.

Stock dropped 30% last Thursday as the 0% convertible notes priced.

The convertible notes offering played to strong demand during book building, especially from hedge accounts attracted to the high vol. stock.

Parsons lifted

Parsons’ 2.625% convertible notes due 2029 continued to gain in the aftermarket with the notes sought after by buyers, sources said.

The 2.625% notes added 1.5 points outright with stock up almost 2%.

They were trading at 106.5 versus a stock price of $80.59 in the late afternoon, according to a market source.

There was $15 million in reported volume.

Parsons’ stock traded to a low of $79.46 and a high of $81.27 before closing at $80.54, up 1.49%.

The notes have made strong outright and dollar-neutral gains since pricing on Feb. 21.

Lyft day 2

Lyft’s 0.625% convertible notes due 2029 held onto the strong outright and dollar-neutral gains made on their aftermarket debut last Friday with activity in the issue dwindling.

The 0.625% convertible notes were trading at 103.375 versus a stock price of $16.10 in the late afternoon, according to a market source.

There was $5 million in reported volume.

Lyft’s stock traded to a low of $15.80 and a high of $16.34 before closing at $15.95, down 0.37%.

The notes expanded 2.5 to 3 points dollar-neutral last Friday.

Sunrun struggles

Sunrun’s 4% convertible notes due 2030 struggled in the aftermarket with the notes sinking further below their discounted issue price after a disastrous trading debut.

The 4% convertible notes shed another 1 point outright with stock down about 5%.

The notes were trading at 92.875 versus a stock price of $11.69 in the late afternoon.

There was $9 million in reported volume.

Sunrun’s stock traded to a low of $11.16 and a high of $12.23 before closing at $11.38, off 4.37%.

The notes struggled during book building with the offering pricing at a discounted issue price of 99.75 and saw heavy selling on their aftermarket debut last Friday.

The notes sank to a 93-handle and contracted 2.5 points dollar-neutral on debut.

Mentioned in this article:

Five9 Inc. Nasdaq: FIVN

Lyft Inc. Nasdaq: LYFT

Parsons Corp. NYSE: PSN

Progress Software Corp. Nasdaq: PRGS

Sunrun Inc. Nasdaq: RUN

Super Micro Computer Inc. Nasdaq: SMCI

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