Wayfair convertibles on tap; Enphase, Sunnova, Ormat notes strengthen; Coupa rises

By Abigail W. Adams

Portland, Me., Sept. 7 – The convertibles primary market returned to action on Wednesday as equity markets broke their rout.

In the latest refinancing offering, Wayfair Inc. plans to price $600 million of five-year convertible notes after the market close on Thursday with price talk for a coupon of 3.25% to 3.75% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

Citigroup Global Markets Inc. and Goldman Sachs & Co. LLC are bookrunners for the Rule 144A offering, which carries a greenshoe of $90 million.

The deal launched on a strong day for equities despite downwardly revised forecasts for China’s GDP and continued hawkish comments from Federal Reserve officials.

The Dow Jones industrial average closed Wednesday up 436 points, or 1.4%, the S&P 500 index closed up 1.83%, the Nasdaq Composite index closed up 2.14% and the Russell 2000 index closed up 2.21%.

While strong on Wednesday, sources questioned the staying power of the rally with the Federal Reserve’s September meeting around the corner.

“There’s no confidence,” a source said.

Trading activity remained muted amid the market rally with $60 million in reported volume about one hour into the session and $387 million in reported volume about one hour before the market close.

The convertible notes of renewable energy companies were in focus with a hot day for the sector, which was attributed to the recent passage of the Inflation Reduction Act.

Ormat Technologies Inc.’s 2.5% convertible notes due 2027 were the most actively traded issue of the day with the notes up outright and dollar-neutral.

Sunnova Energy International Inc.’s 0.25% convertible notes due 2026 and Enphase Energy Inc.’s 0% convertible notes due 2026 also jumped outright on a strong day for the companies’ equities.

While volume in the name was light, Coupa Software Inc.’s convertible notes were also making gains after a surprise earnings beat.

Renewable energy eyed

The convertible notes of renewable energy companies were in focus on Wednesday on a hot day for the sector.

Ormat’s 2.5% convertible notes due 2027 were the most actively traded issue on a slow day in the secondary space with the notes up on an outright and dollar-neutral basis.

The 2.5% notes rose 4.75 points outright with stock up more than 5.5%.

They were changing hands at 124.875 versus a stock price of $97.55 in the late afternoon.

The notes expanded 0.5 point dollar-neutral on the move, a source said.

There was $11 million in reported volume.

The geothermal energy company’s stock traded to a low of $92.36 and a high of $97.74 before closing the day at $97.11, an increase of 5.58%.

Sunnova’s 0.25% convertible notes due 2026 jumped outright alongside stock.

The notes were up 6 points outright with stock up 9%.

They were changing hands at 98.5 versus a stock price of $27.84 in the late afternoon.

There was $8.5 million in reported volume.

The residential solar company’s stock traded to a low of $25.24 and a high of $28.03 before closing the day at $27.64, an increase of 9.4%.

Enphase Energy’s 0% convertible notes due 2026 jumped 4.5 points outright with stock up another 8%.

The 0% convertible notes were seen at 124 versus a stock price of $312.97 in the late afternoon.

The solar energy technology company’s stock traded to a low of $291.12 and a high of $318.22 before closing the day at $316.31, an increase of 8.02%.

Renewable energy companies have seen renewed attention since the passage of the Inflation Reduction Act, which provided a historic amount of funding to clean energy.

Coupa’s earnings

While volume in the name was light, Coupa’s convertible notes were one of the “winners of the day,” with the notes making gains on an outright and dollar-neutral basis after a surprise earnings beat.

Coupa’s 0.375% convertible notes due 2026 rose about 2 points outright with stock up more than 15%.

The notes were changing hands at 79.875 early in the session.

Coupa’s 0.125% convertible notes due 2025 also rose 2 points outright.

They were trading at 87.5 early in the session and rose to 88 by the market close.

The high-premium notes expanded about 0.375 to 0.5 point dollar-neutral on the move, a source said.

However, volume in the notes was light, which was a surprise to some sources given the strength of the stock move.

Coupa’s stock traded to a low of $61 and a high of $66.15 before closing the day at $65.82, an increase of 17.91%.

The software company’s stock surged as earnings bested expectations. Coupa reported earnings per share of 20 cents versus analyst expectations for earnings of 9 cents.

Revenue was $211.1 million versus analyst expectations for revenue of $203.99 million.

There is speculation the company would be a good takeover target, a source said.

Mentioned in this article:

Coupa Software Inc. Nasdaq: COUP

Enphase Energy Inc. Nasdaq: ENPH

Ormat Technologies Inc. NYSE: ORA

Sunnova Energy International Inc. NYSE: NOVA

Wayfair Inc. NYSE: W

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