Xometry on deck; Wolfspeed oversubscribed; Southwest Airlines active; CryoPort gains

By Abigail W. Adams

Portland, Me., Jan. 31 – The convertibles primary market returned to action on Monday with two new offerings on deck.

Xometry Inc. plans to price $250 million of five-year convertible notes after the market close on Tuesday with price talk for a coupon of 0.5% to 1% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

Goldman Sachs & Co. LLC (lead left), J.P. Morgan Securities LLC and BofA Securities Inc. are bookrunners for the Rule 144A offering, which carries a greenshoe of $37.5 million.

Wolfspeed Inc. plans to price $500 million of six-year convertible notes after the market close on Monday.

The deal looked cheap based on underwriters’ assumptions and was heavily oversubscribed, sources said.

Wolfspeed will mark the second new offering of the month, which has been a brutal one for risk assets.

However, equity indexes saw a strong close to a volatile month with optimism surrounding earnings alleviating concerns around monetary tightening.

The tech sector and small cap stocks led Monday’s rebound.

The Dow Jones industrial average closed the day up 406 points, or 1.17%, the S&P 500 index closed the day up 1.89%, the Nasdaq Composite closed up 3.41% and the Russell 2000 index closed up 3.05%.

However, trading activity in the secondary space was muted although the market’s tone improved.

There was $68 million in reported convertibles trading volume about one hour into the session and $520 million on the tape about one hour before the market close.

Southwest Airlines Co.’s 1.25% convertibles due 2025 (Baa1/BBB) were among the most actively traded issue during Monday’s session with the notes gaining on an outright basis and dollar-neutral basis alongside stock.

CryoPort Inc.’s 0.75% convertible notes due 2026 were also on the rise on an outright and dollar-neutral basis on a strong day for the company’s stock.

Wolfspeed oversubscribed

Wolfspeed plans to price $500 million of six-year convertible notes after the market close on Monday with price talk for a coupon of 0.25% to 0.75% and an initial conversion premium of 30% to 35%.

The deal was heard to be in the market with assumptions of 350 basis points over Libor and a 42% vol., a source said.

Using those assumptions, the deal looked 1.8 points cheap at the midpoint of talk.

The deal played to heavy demand and was multiple times oversubscribed by 10 a.m. ET, a source said.

The offering is believed to be pricing on the rich end of talk.

Southwest active

Southwest’s 1.25% convertible notes due 2025 were among the most actively traded issues during Monday’s session.

The 1.25% convertible notes were changing hands at 134.25 versus a stock price of $43.31 early in the session, according to a market source.

They continued to climb alongside stock and were changing hands at 135.5 versus an equity price of $25.99 in the late afternoon.

The notes gained about 0.25 point dollar-neutral.

There was $21 million in reported volume.

Southwest’s stock traded to a low of $42.28 and a high of $44.83 before closing the day at $44.76, an increase of 4.21%.

CryoPort gains

CryoPort’s 0.75% convertible notes due 2026 saw renewed attention in the secondary space with the notes posting gains on an outright and dollar-neutral basis as stock surged.

The 0.75% notes rose 2 points outright.

They were changing hands at 81.125 versus a stock price of $40.72 in the late afternoon.

The notes gained about 0.5 point dollar-neutral, a source said.

CryoPort’s stock traded to a low of $37.29 and a high of $41.83 before closing the day at $41.77, an increase of 11.33%.

Stock surged alongside other small cap stocks.

Mentioned in this article:

CryoPort Inc. Nasdaq: CYRX

Southwest Airlines Co. NYSE: LUV

Xometry Inc. Nasdaq: XMTR

Wolfspeed Inc. NYSE: WOLF

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