21Vianet, Bentley Systems on tap; Western Digital, Pioneer Natural Resources in focus

By Abigail W. Adams

Portland, Me., Jan. 20 – The convertibles primary market returned to action on Wednesday with two deals totaling $1.25 billion on deck.

21Vianet Group Inc. plans to price $525 million of five-year convertible notes and Bentley Systems Inc. plans to sell $500 million of five-year convertible notes after the market close on Thursday.

Meanwhile, the secondary space saw another strong day as equities soared to new heights following the successful inauguration of president-elect Joseph Biden.

The Dow Jones industrial average closed the day up 257 points, or 0.83%, the S&P 500 closed the day up 1.39%, the Nasdaq closed the day up 1.97% and the Russell 2000 closed the day up 0.35%.

Investment-grade convertible notes remained in focus with Western Digital Corp.’s 1.5% convertible notes due 2024 and Pioneer Natural Resources Co.’s 0.25% convertible notes due 2025 the major volume movers of Wednesday’s session.

DocuSign Inc.’s recently priced 0% convertible notes due 2024 were also active.

The calendar

The forward calendar grew on Wednesday with two deals launched after the market close.

21Vianet Group plans to price $525 million of five-year convertible notes after the market close on Thursday with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 32.5% to 37.5%, according to a market source.

Morgan Stanley & Co. LLC, Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC and UBS Securities LLC are bookrunners for the Rule 144A offering, which carries a greenshoe of $75 million.

Bentley Systems plans to sell $500 million of five-year convertible notes after the market close on Thursday with price talk for a coupon of 0.125% to 0.625% and an initial conversion premium of 40% to 45%, according to a market source.

BofA Securities Inc., Goldman Sachs & Co. LLC, Mizuho Securities USA Inc. and KeyBanc Capital Markets Inc. are bookrunners for the Rule 144A offering, which carries a greenshoe of $75 million.

Investment grade

Investment-grade convertible notes remained in focus in the secondary space with Western Digital’s 1.5% convertible notes due 2024 and Pioneer Natural Resources’ 0.25% convertible notes due 2025 the major volume movers during Wednesday’s session.

Western Digital’s 1.5% convertible notes were wrapped around par in the high-volume activity, a source said.

There was more than $30 million in reported volume during Wednesday’s session.

The investment-grade rated notes were trading for their yield, a source said.

The 1.5% yield on the notes “is basically the spread for IG,” a source said. “It’s a cash alternative.”

Pioneer Natural Resources’ 0.25% convertible notes due 2025 also saw heavy volume.

The notes were up about 1 point outright with stock largely flat.

The 0.25% convertible notes were changing hands at 145.5 in the late afternoon.

Pioneer Natural Resources’ stock traded to a high of $134.53 and a low of $130.92 before closing the day largely flat at $132.13, an increase of 0.068%.

The investment-grade rated notes are one of the few issues from the energy sector in the convertibles universe.

There has been a steady stream of buyers looking to play the energy space, especially given the rally in crude oil futures.

The rally continued on Wednesday with WTI crude oil futures closing the day at $53.24, an increase of 26 cents or 0.49%.

DocuSign active

DocuSign’s recently priced 0% convertible notes due 2024 continued to gain on an outright basis as stock wavered between gains and losses.

The 0% convertible notes were changing hands at 107.75 early in the session with stock up a little over 1%.

The notes continued to trade around 107.75 in the late afternoon even as stock turned negative.

DocuSign’s stock traded to a high of $262.47 and a low of $253.70 before closing the day at $255.31, a decrease of 0.49%.

Mentioned in this article:

21Vianet Group Inc. Nasdaq: VNET

Bentley Systems Inc. Nasdaq: BSY

DocuSign Inc. Nasdaq: DOCU

Pioneer Natural Resources Co. NYSE: PXD

Western Digital Corp. Nasdaq: WDC

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