Bentley Systems eyed on takeover talk; Super Micro drops below par, holds dollar-neutral

By Abigail W. Adams

Portland, Me., April 19 – The convertibles primary market marked its third consecutive week with no new issuance with earnings season blackouts and renewed rate volatility putting a drag on dealmaking.

While there may be a smattering of activity over the next two weeks, the primary market is not expected to truly reignite until May, sources said.

And when it does, the higher-for-longer rate environment the market is now pricing in may be a boon for issuance.

Meanwhile, the secondary space saw a quiet close to a largely quiet week with the market still better to sell although no panic had set in, sources said.

Equity indexes were mixed on Friday with the tech-heavy Nasdaq the underperformer as Netflix dragged down the index.

The Dow Jones industrial average closed Friday up 211 points, or 0.56%, the S&P 500 index closed down 0.88%, the Nasdaq Composite index closed down 2.05% and the Russell 2000 index closed up 0.24%.

There was $80 million in reported volume about one hour into the session and $400 million on the tape in the late afternoon.

In a carryover from the previous session, Bentley Systems Inc.’s convertible notes remained active with the notes holding on to the gains made the previous session after news broke about a potential acquisition.

Super Micro Computer Inc.’s 0% convertible notes due 2029 plunged outright but held dollar-neutral as stock dropped more than 20% after announcing its report date with no preannouncements.

Rexford Industrial Realty, LP’s two tranches of exchangeable notes (Baa2/BBB+/BBB+) remained active with the notes continuing to trade near their all-time lows although they were holding up well on hedge.

Bentley Systems in focus

Bentley Systems’ convertible notes remained in focus on Friday with the notes holding their gains from the previous session.

The 0.375% convertible notes due 2027 were largely unchanged day over day with the notes wrapped around 92, a source said.

There was $30 million in reported volume.

Bentley’s 0.125% convertible notes due 2026 remained on a 101-handle with the notes trading at 101.25 in the late afternoon, a source said.

There was $11 million in reported volume.

Bentley Systems’ stock traded to a low of $51.04 and a high of $52.62 before closing at $52.46, up 0.77%.

The 0.375% convertible notes jumped 4 points outright and the 0.125% convertible notes gained 3 points outright as stock surged 6% late Thursday after Schneider Electric confirmed it was in discussions with Bentley Systems about a potential acquisition in response to market speculation.

Both tranches expanded 0.25 point to 0.5 point dollar-neutral on the move up, a source said.

While the notes gained on the acquisition speculation, the rally was limited with the market not expecting a full takeover but more of a joint venture, a source said.

The talks are in their preliminary stages, Schneider Electric said in a press release.

Super Micro doubts

Super Micro’s 0% convertible notes due 2029 plunged to their lowest outright level since pricing as stock dropped 20% with the market apprehensive about earnings.

The 0% convertible notes dropped 12 points outright to trade at 95.625 in the late afternoon, a source said.

The trading level marked the lowest for the notes since the $1.73 billion issue priced at par on Feb. 22.

However, the notes were unchanged on hedge.

They were “doing what they’re supposed to do,” a source said.

While slow to hit the tape early in the session, there was $20 million in reported volume heading into the market close.

Super Micro’s stock traded to a high of $890.83 and a low of $710.95 before closing at $713.65, a decrease of 23.14%.

Stock plunged after Super Micro announced its earnings report date for April 30 with no positive earnings preannouncements, which the market took as a bad sign.

Rexford active

Rexford’s exchangeable notes remained active on Friday with the notes continuing to trade at their lowest level since pricing.

Rexford’s 4.375% exchangeable notes due 2027 continued to trade on a 97-handle with the notes changing hands at 97.625 in the late afternoon.

There was $20 million in reported volume.

The 4.125% exchangeable notes due 2029 remained wrapped around 96.

There was $10 million in reported volume.

Rexford’s stock traded to a low of $42.16 and a high of $43.36 before closing at $42.74, down 1.04%.

The exchangeable notes hit their lowest outright level since pricing in late March earlier in the week with stock pummeled on the heels of earnings.

While down outright, the notes were holding up well on hedge.

Mentioned in this article:

Bentley Systems Inc. Nasdaq: BSY

Rexford Industrial Realty Inc. NYSE: REXR

Super Micro Computer Inc. Nasdaq: SMCI

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