Workday prices in the middle of talk, trades above par; Wayfair’s issue adds to gains

By Stephanie N. Rotondo

Seattle, Sept. 13 – New issues in the convertibles market continued to be all the rage in midweek trading.

After announcing a deal late Monday, Workday Inc. finally priced its $1 billion offering of convertible senior notes due 2022 before the market opened on Wednesday.

The deal came with a yield of 0.25% and an initial conversion premium of 37.5%. The terms came right in the middle of the 0% to 0.5% yield talk and the 35% to 40% conversion premium talk.

Morgan Stanley & Co. LLC and BofA Merrill Lynch are the joint bookrunners on the Rule 144A deal.

Toward the close, a trader quoted the convertibles in a 100.625 to 100.75 context.

In early dealings, a trader saw the bonds a touch better than their par issue price, pegging the paper in a 100.25 to 100.5 context.

The company’s stock was also a shade higher, adding a penny to close at $107.02.

Though currently trading on the New York Stock Exchange, Workday’s shares are slated to move to the Nasdaq Global Select Market on Sept. 19.

The company plans to use proceeds from the offering to repay or repurchase its outstanding 0.75% convertible senior notes due 2018 and 1.5% convertible senior notes due 2020, or to pay cash amounts due on those bonds upon conversion.

The older issues were also busy in Wednesday trading, though both were about unchanged.

A market source saw the 0.75% convertibles ending with a 132 handle, while the 1.5% convertibles were seen with a 142 handle.

As for Wayfair Inc.’s $375 million of 0.375% convertible senior notes due 2022 – a deal priced late Monday – it continued to trend higher.

One trader saw the bonds at 105.5 bid, 105.75 offered by day’s end.

A trader had placed the issue at 105.875 bid, 106.125 offered at mid-morning.

The paper had been trading with a 104 handle as of Tuesday’s close.

Wayfair’s stock was slightly softer, however, after pushing up nearly 7% on Tuesday.

The equity was down $1.41, or 1.71%, at $80.97.

The Rule 144A deal was increased from an expected $300 million. Initial price talk was for a 0.625% to 1.125% yield and an initial conversion premium of 32.5% to 37.5%.

Goldman Sachs & Co. and Citigroup Global Markets Inc. ran the books.

Teva comes back in

Teva Pharmaceutical Industries Ltd.’s convertibles were yet again getting some attention on Wednesday.

However, while Teva’s 0.25% convertible notes due 2026 were up in the previous two sessions, they gave back some gains in midweek trading.

One trader called the bonds “active,” trading in a 91 to 91.25 range.

The paper had been closer to 92 as of Tuesday’s close.

The underlying equity also gave up some ground, falling 46 cents, or 2.38%, to $18.86.

The stock was up almost 4.5% in Tuesday trading.

Teva’s debt started to move up on Monday when the company said it had hired Kare Schultz as president and CEO after an arduous search.

Schultz will replace Yitzhak Peterburg, who has been interim CEO since Erez Vigodman departed the post in February.

Previously, Schultz was president and CEO of H. Lundbeck A/S, which he helmed as the company was facing the loss of critical patents. He was also the former chief operating officer of Novo Nordisk A/S.

Come Tuesday, it was more good news, as Teva said it was selling its contraceptive device business to Cooper Cos. for $1.1 billion.

Teva’s Paragard is technically part of the company’s women’s health unit, which it has been in the process of selling, either in whole or by piecemeal. The device generated revenue of $168 million for the 12-month period ended June 30.

The sale is part of the company’s plan to generate $2 billion from asset sales.

Mentioned in this article:

Teva Pharmaceutical Industries Ltd. NYSE: TEVA

Wayfair Inc. NYSE: W

Workday Inc. NYSE: WDAY

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