RingCentral, Canadian Solar convertible offerings on deck; Slack, Coupa active post-earnings

By Abigail W. Adams

Portland, Me., Sept. 9 – The convertible primary market returned to action on Wednesday, which was widely anticipated as the stock market recovered from its three-session rout.

Two deals totaling $800 million launched with pricing anticipated after the market close on Thursday.

RingCentral Inc. is in the market with a $600 million offering of convertible notes due March 15, 2026 and Canadian Solar Inc. plans to price $200 million five-year convertible notes.

Meanwhile, the secondary space saw an uptick in activity on Wednesday as equity indexes recovered from Tuesday’s sell-off.

Wayfair Inc.’s recently priced 0.625% convertible notes due 2025 continued to see heavy volume as stock recovered.

While the notes gained outright, they were little changed dollar-neutral.

Slack Technologies Inc.’s 0.5% convertible notes due 2025 and Coupa Software Inc.’s 0.375% convertible notes due 2026 were active as stock sold off following the software companies’ earnings reports.

While Slack’s 0.5% convertible notes were down outright, they improved dollar-neutral, a source said.

The calendar

The primary market returned to action on Wednesday with two deals on deck.

RingCentral plans to price $600 million of convertible notes due March 15, 2026 after the market close on Thursday at par with price talk for a fixed coupon of 0% and an initial conversion premium of 50% to 55%, according to a market source.

Morgan Stanley & Co. LLC is lead left bookrunner for the Rule 144A offering, which carries a greenshoe of $100 million.

Concurrent with the offering, the company intends to repurchase a portion of its 0% convertible notes due 2023 for cash in individually negotiated transactions.

Canadian Solar plans to price $200 million of five-year convertible notes after the market close on Thursday with price talk for a coupon of 2.25% to 2.75% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

Barclays (lead left), Nomura Securities International Inc. and Citigroup Global Markets Inc. are joint bookrunners for the Rule 144A and Regulation S offering, which carries a greenshoe of $30 million.

Wayfair in focus

Wayfair’s 0.625% convertible notes due 2025 were again major volume movers in the secondary space as stock recovered after taking a beating the last few sessions.

While the 0.625% convertible notes were up about 0.5 point outright, they were moving largely in line dollar-neutral, a source said.

The notes were changing hands around 97.875 early in the session. They were wrapped around 98 in the late afternoon.

There were some large trades in the name with more buyers than sellers, a source said.

Wayfair stock traded to a high of $266.36 and a low of $251.33 before closing the day at $258.31, an increase of 2.52%.

The 0.625% convertible notes traded below par for the first time on Sept. 3 as stock sold off amid the rout in equities.

Slack up on swap

Slack Technologies’ 0.5% convertible notes due 2025 were active on Wednesday with the notes down outright but up dollar-neutral following its second-quarter earnings report.

The 0.5% notes dropped 8 points outright with stock off nearly 14% during Wednesday’s session.

However, they were improved on a dollar-neutral basis.

The 0.5% notes were changing hands around 112 in high-volume activity on Wednesday.

They were up about 0.5 point dollar-neutral, a source said.

Slack stock traded to a high of $25.83 and a low of $24.20 before closing the day at $25.24, a decrease of 13.89%.

The software company beat on both the top and bottom lines in its second-quarter earnings report.

Slack reported zero earnings per share versus analyst expectations for a loss per share of 3 cents.

Revenue was $215.9 million versus analyst expectations for revenue of $209 million.

However, stock slid due to the software company not achieving the same Covid-19 bump others in the sector have with the transition to a remote workforce, CNBC reported.

Coupa’s earnings

Coupa’s 0.375% convertible notes due 2026 also saw high-volume activity on Wednesday as stock sank following its second-quarter earnings report.

The 0.375% notes were down 5 points outright with stock off a little less than 6%.

The notes were changing hands at 114.5 in the late afternoon.

Coupa stock traded to a high of $273.90 and a low of $252.35 before closing the day at $260.48, a decrease of 5.86%.

The business spend management technology company beat analyst expectations on both the top and bottom lines in its second-quarter earnings report.

However, stock was selling off on weak guidance.

Coupa reported earnings per share of 21 cents versus analyst expectations for earnings of 8 cents.

Revenue was $125.9 million versus analyst expectations for revenue of 118.8 million.

However, the company fell short of expectations for the third quarter with the company expecting earnings per share of 2 to 3 cents versus analyst expectations for earnings of 5 cents.

Mentioned in this article:

Canadian Solar Inc. Nasdaq: CSIQ

Coupa Software Inc. Nasdaq: COUP

RingCentral Inc. NYSE: RNG

Slack Technologies Inc. NYSE: WORK

Wayfair Inc. NYSE: W

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