By Abigail W. Adams
Portland, Me., Nov 13 – Rambus Inc. and Quotient Technology Inc. announced new deals after the market close on Monday. Rambus plans to price $150 million in convertible notes due 2023 and Quotient $175 million in convertible notes due 2022.
In trading Square Inc.’s stock and 0.375% convertible due 2022 reached record highs Monday as investors see the company as “a powerful momentum name” that is stealing market share from blue chip names like MasterCard and Visa that have dominated the industry.
Recent issues from Sarepta Therapeutics and Weibo Corp. continued to trade high and actively in Monday’s session. Teva Pharmaceutical Finance Co. LLC’s underweight by analysts and cut to junk status by a rating agency had little impact on its 0.25% convertible during trading, in contrast to its 2.2% investment-grade straight bond.
New deals
Rambus plans to price $150 million in convertible notes due 2023 with price talk for a coupon of 1.5% to 2% and an initial conversion premium of 27.5% and 32.5% after the market close Tuesday.
The Rule 144A deal carries a greenshoe of $22.5 million.
Barclays, Credit Suisse, and Deutsche Bank are the bookrunners.
Proceeds will be used for purchase of a call spread, the repurchase of up to $60 million of Rambus’ outstanding 1.125% convertible notes and for general corporate purposes.
Quotient Technology also announced after market close plans to price $175 million in convertible notes due 2022. The Rule 144A deal carries a greenshoe of $25 million.
Square’s growth momentum
After losing 2 points in early trades, Square’s 0.375% convertible made large gains throughout the day. The note closed at 180.89, an almost 6 point increase from the opening level, according to Trace data.
Square stock also ended the day at a record high of $40, an increase of 2.01% over the company’s previous record-high closing price of $39.21 on Friday.
The convertible note and stock surged after Square raised its forward guidance and released third-quarter earnings which beat expectations on Nov. 8.
The San Francisco, Calif.-based financial services and mobile payment company’s sales growth and margin expansion over the past 3 years has ranked in the 98th and 97th percentile, according to the metrics of his investment firm, a market source said.
While the company is a “laggard on down days” and falls “pretty aggressively” when the market does, the company has momentum that does not appear to be fading, the source said.
“This is a growth momentum trade not a value trade,” the source said. “This is a disruptive brand stealing market share from an industry with blue chip brands. It looks like the right space for a new brand to come in.”
Recent issues in demand
Sarepta’s recently priced 1.5% convertible due 2024 has gained 6 points in a steady climb upwards since it hit the market last week. Trades at Monday’s market close were 106.3, a 2 point gain from Friday’s closing level, according to Trace data.
The recently priced deal had a strong pipeline that involved large institutional investors, a market source said. Sarepta stock was conversely up by 0.61%, closing the day at $54.49.
Weibo’s new 1.25% convertible due 2022 is trading 11 points above par, closing the session on Monday at 111.93, according to Trace data. Weibo’s stock and convertible note surged after the company announced its third-quarter earnings on Nov. 7 with revenue up 81% year-over-year.
Weibo’s stock also made gains on Monday, closing the day at $108.59, an increase of 3.26%.
Teva unchanged
There was little interest in Teva’s 0.25% convertible due 2026 with only 4 recorded trades during the session, according to Trace data. The note made a 2 point gain on the session with the last recorded trade at 85.61, a typical trading price for the convertible over the past few weeks.
Instead, traders turned their attention to Teva’s 3.15%, 4.1%, and 2.2% investment-grade bonds, which each experienced a flurry of trading activity during Monday’s session.
J.P. Morgan downgraded parent company Teva Pharmaceutical Industries Ltd. to underweight on Monday and Fitch Ratings lowered Teva’s credit rating to junk status last week. Teva stock closed the day at $11.74 on Monday, a decrease of 0.34%.
Mentioned in this article:
Rambus Inc. Nasdaq: RMBS
Quotient Technology Inc. Nasdaq: QTNT
Square Inc. NYSE: SQ
| Sarepta Therapeutics Nasdaq: | SRPT
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| Weibo Corp. | Nasdaq: WB
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| Teva Pharmaceutical Industries Ltd. | NYSE: TEVA
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