Morning Commentary: Datadog, Cerence convertibles expand; Bilibili contracts on debut

By Abigail W. Adams

Portland, Me., May 29 – The convertibles primary market rounded out another active week with three issuers pricing a cumulative $1.5 billion.

The three deals brought the weekly tally to $3.325 billion with the truncated post-holiday week doing little to dampen the pipeline.

Datadog Inc. priced an upsized $650 million of five-year convertible notes, Bilibili Inc. priced an upsized $700 million of seven-year convertible notes and Cerence Inc. sold $150 million of long five-year convertible notes after the market close on Thursday.

The new paper had mixed performances in the secondary space with new paper from Bilibili down on both an outright and dollar-neutral basis and Datadog and Cerence expanding.

Datadog in demand

Datadog priced an upsized $650 million of five-year convertible notes after the market close on Thursday at par at the rich end of talk with a coupon of 0.125% and an initial conversion premium of 37.5%, according to a market source.

Price talk was for a coupon of 0.125% to 0.625% and an initial conversion premium of 32.5% to 37.5%, according to a market source.

The greenshoe was also upsized to $97.5 million.

The initial size of the deal was $550 million with a greenshoe of $82.5 million.

The new paper was putting in a strong performance in the secondary space.

It traded up to 104 on an outright basis and was expanded 2.5 to 3 points dollar-neutral, a source said.

Datadog stock was changing hands at $68.55, an increase of 2.12%, shortly before 11 a.m. ET.

Bilibili contracts

Bilibili sold an upsized $700 million of seven-year convertible notes after the market close on Thursday at par at the cheap end of talk with a coupon of 1.25% and an initial conversion premium of 32.5%.

Price talk was for a coupon of 0.75% to 1.25% and an initial conversion premium of 32.5% to 37.5%, according to a market source.

The initial size of the deal was $650 million.

The new 1.25% notes were struggling in the secondary space.

They traded down to 99 on an outright basis and were contracted about 2.5 points dollar-neutral, sources said.

There were few buyers in the market for the notes, a source said.

Bilibili’s American Depositary Shares were changing hands at $31.09, an increase of 1.14%, shortly before 11 a.m. ET.

Cerence at the mids

Cerence priced $150 million of long five-year convertible notes after the market close on Thursday at par at the midpoint of talk with a coupon of 3% and an initial conversion premium of 35%.

Price talk was for a coupon of 2.75% to 3.25% and an initial conversion premium of 32.5% to 37.5%, according to a market source.

The new paper traded up on an outright and dollar-neutral basis early Friday.

The notes were changing hands at 101.5 outright and were expanded about 1 point dollar-neutral.

Cerence stock traded up to $28.44, an increase of 2.62%, shortly before 11 a.m. ET.

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