Bentley convertibles offering looks cheap, existing notes contract; Etsy gains continue

By Abigail W. Adams

Portland, Me., June 23 – While sources expected more activity from the convertibles primary market during the last full week of the second quarter, one new offering was in the works.

Bentley Systems Inc. plans to price $500 million of six-year convertible notes after the market close on Wednesday.

The deal looked cheap based on underwriters’ assumptions and played to healthy demand during bookbuilding, sources said.

Meanwhile, trading activity in the secondary space was muted on Wednesday as equities struggled to find direction.

While the Dow Jones industrial average closed the day down 71 points, or 0.21%, and the S&P 500 index down 0.11%, the Nasdaq Composite again notched a fresh record and closed the day up 0.13%.

Bentley Systems’ outstanding convertible notes were active and trading off on an outright and dollar-neutral basis.

Booking Holdings Inc.’s 0.75% convertible notes due 2025 were active although with little movement in price.

Etsy Inc.’s recently priced 0.25% convertible notes due 2028 continued to gain on an outright basis as stock continued to see upward momentum.

Bentley Systems eyed

Bentley Systems plans to price $500 million 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 32.5% to 37.5%, according to a market source.

The deal from the infrastructure engineering software company was heard to be in the market with assumptions of 275 basis points over Libor and a 37% vol.

Using those assumptions, the deal looked 1.43 points cheap at the midpoint of talk, a source said.

While the company is a solid credit, the vol. assumptions seemed a little aggressive, another source said.

However, the deal was playing to solid demand during bookbuilding.

The deal was believed to be pricing at the midpoint of talk, a source said.

Bentley Systems is returning to the convertibles market after tapping it as recently as January, when it priced a $690 million issue of 0.125% convertible notes due 2026 versus a stock price of $44.23.

The 0.125% convertible notes due 2026 were active on Wednesday’s and trading off on an outright and dollar-neutral basis.

The 0.125% notes were down 5 points outright with stock off 6%.

They were changing hands at 117 early in the session and continued to trend lower as the session progressed.

They were seen changing hands at 116 in the late afternoon.

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

“It makes sense,” a source said. “People are selling the old to get into the new.”

The market hedge for the notes was about 74%.

Bentley Systems’ stock traded to a high of $64.35 and a low of $61.03 before closing the day at $61.65, a decrease of 6.56%.

Etsy up again

Etsy’s 0.25% convertible notes due 2028 continued their upward momentum in active trading on Wednesday.

The notes gained about 1 point with stock up more than 1% early in the session.

They traded as high as 103.625 before dropping back down to 103 heading into the market close.

Wednesday marked the highest outright level for the notes since the Brooklyn-based e-commerce platform priced the $1 billion issue in early June.

Etsy’s stock continued its upward momentum on Wednesday.

Stock traded to a low of $178.12 and a high of $182.21 before closing the day at $179.45, an increase of 0.83%.

Booking active

Booking Holdings’ 0.75% convertible notes due 2025 were active on Wednesday although with little movement in price.

The 0.75% convertible notes were changing hands around 144.375.

While the notes saw heavy volume by dollar amount, there were only a few trades on the tape with a large seller in the market, sources said.

Booking’s stock traded to a high of $2,261.03 and a low of $2,232.73 before closing the day at $2,246.28, a decrease of 0.21%.

The activity in the name was most likely the result of end-of-quarter portfolio adjustments.

Mentioned in this article:

Bentley Systems Inc. Nasdaq: BSY

Booking Holdings Inc. Nasdaq: BKNG

Etsy Inc. Nasdaq: ETSY

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