Porch Group convertible notes offering eyed; busy primary expected; Coinbase contracts

By Abigail W. Adams

Portland, Me., Sept. 13 – The convertibles primary market launched what sources expect to be a busy week for new deal activity with three new offerings on deck.

Jamf Holding Corp. plans to price $325 million of five-year convertible notes and PAR Technology Corp. plans to price $200 million of six-year convertible notes after the market close on Tuesday.

Porch Group Inc. plans to price $350 million of five-year convertible notes after the market close on Monday.

The deal looked cheap based on underwriters’ assumptions and was heard to be doing well during bookbuilding.

Meanwhile, the secondary space was active on a choppy day for equities with benchmarks wavering between gains and losses as investors await the latest data on inflation, which is set to be released on Tuesday.

While the Dow Jones industrial average broke a week-long route and closed the day up 262 points, or 0.76%, the S&P 500 index and Nasdaq Composite wavered between gains and losses before closing the day mixed.

The S&P 500 turned positive and closed the day up 0.23% while the Nasdaq Composite closed the day down 0.07%.

There was $95 million on the tape a little over one hour into the session and $470 million on the tape about one hour before the market close.

Sea Ltd.’s 0.25% convertible notes due 2026, Beauty Health Co.’s 1.25% convertible notes due 2026 and BigCommerce Holdings Inc.’s 0.25% convertible notes due 2026 remained active with the notes moving largely in line on a dollar-neutral basis.

Meanwhile, Coinbase Global Inc.’s 0.5% convertible notes due 2026 were under pressure on an outright and dollar-neutral basis after the company announced a $1.5 billion two-tranche junk bond offering.

The calendar

The convertibles primary market launched what promises to be an active week with three deals on deck.

Jamf plans to price $325 million five-year convertible notes after the market close on Tuesday with price talk for a coupon of 0.125% to 0.625% and an initial conversion premium of 32.5% to 37.5%.

The deal was heard to be in the market with assumptions of 325 basis points over Libor and a 35% vol., according to a market source.

Using those assumptions, the deal looked about 0.75 point cheap at the midpoint of talk.

PAR Technology plans to price $200 million of six-year convertible notes after the market close on Tuesday with price talk for a coupon of 1.25% to 1.75% and an initial conversion premium of 32.5% to 37.5%.

The deal was heard to be in the market with assumptions of 525 bps over Libor and a 42% vol., according to a market source.

Using those assumptions, the deal looked 2.47 points cheap at the midpoint of talk.

Porch Group in focus

Porch Group plans to price $350 million of five-year convertible notes after the market close on Monday with price talk for a coupon of 0.5% to 1% and an initial conversion premium of 30% to 35%.

The deal was heard to be in the market with assumptions of 500 bps over Libor and a 42% vol., according to a market source.

Using those assumptions, the deal looked 1.84 points cheap at the midpoint of talk, a source said.

However, given the company’s cash burn, some sources felt the credit spread should be wider.

Using a credit spread of 650 bps, the deal looked 0.125 point rich, a source said.

Porch Group’s stock was taking a hit on Monday and sank more than 15%.

The sell-off in stock is not necessarily a bad thing, but it does make trading of the notes more difficult, a source said.

However, the convertible notes are index eligible and hedge funds seem to like it, the source said.

Books closed in the early afternoon.

Day 2

Recent deals remained in focus in the secondary space although they were largely moving in line dollar-neutral.

Sea’s 0.25% convertible notes due 2026 were down slightly on an outright basis with stock off during Monday’s session.

The 0.25% notes were changing hands at 101.75 versus a stock price of $321.85 in the late afternoon.

There was more than $23 million in reported volume.

Sea’s stock traded to a high of $329.72 and a low of $315.53 before closing the day at $323.06, a decrease of 0.75%.

BeautyHealth’s 1.25% convertible notes due 2026 were up about 5 points outright with stock down about 1% in the mid-afternoon.

The 1.25% convertible notes were changing hands just shy of 108 versus a stock price of $25.94.

There was more than $16 million on the tape.

BeautyHealth’s stock traded to a high of $26.25 and a low of $24.85 before closing the day at $25.95, a decrease of 0.8%.

BigCommerce’s 0.25% convertible notes due 2026 were up about 1.5 points with stock up almost 2%.

The 0.25% were changing hands at 105 versus a stock price of $55.84 in the late afternoon.

BigCommerce’s stock traded to a high of $57.49 and a low of $54.03 before closing the day at $55.84, an increase of 1.82%.

Coinbase contracts

Coinbase’s 0.5% convertible notes due 2026 were trading off on an outright and dollar-neutral basis after the company announced a $1.5 billion two-tranche junk bond offering.

The 0.5% convertible notes dropped 1.6 points outright with stock off more than 2%.

They were changing hands at 103 versus an equity price of $243.43 in the late afternoon.

The notes contracted about 0.75 point dollar-neutral, a source said.

Coinbase’s stock traded to a high of $251.88 and a low of $239.60 before closing the day at $242.84, a decrease of 2.21%.

Coinbase’s convertible notes were under pressure after the crypto-currency exchange launched a straight debt offering.

Coinbase plans to price seven-year and 10-year tranches of senior guaranteed notes on Tuesday (Ba1/BB+).

Initial guidance for the seven-year tranche is in the high 3% area; guidance for the 10-year tranche is in the low 4% area.

Mentioned in this article:

Beauty Health Co. Nasdaq: SKIN

BigCommerce Holdings Inc. Nasdaq: BIGC

Coinbase Global Inc. Nasdaq: COIN

Jamf Holding Corp. Nasdaq: JAMF

PAR Technology Corp. NYSE: PAR

Porch Group Inc. Nasdaq: PRCH

Sea Ltd. NYSE: SE

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