Perficient on tap; Impinj expands; Zillow down outright, up on hedge; Chegg active

By Abigail W. Adams

Portland, Me., Nov. 3 – The convertibles primary market remained active on Wednesday with one new deal on deck.

Perficient Inc. plans to price $300 million of five-year convertible notes after the market close on Thursday with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 25% to 30%, according to a market source.

Perficient’s offering comes after the first new convertible bond deal of the month hit the secondary space on Wednesday – Impinj Inc.’s upsized $250 million offering of six-year convertible notes.

The new paper was in demand during bookbuilding and in the aftermarket where it made large gains on an outright and dollar-neutral basis.

The market is hungry for new paper, a source said.

Meanwhile, earnings-related volatility continued to spark activity in outstanding issues.

Zillow Group Inc.’s 2.75% convertible notes due 2025 continued to fall on an outright basis as stock plummeted following disappointing earnings and the end of the company’s foray into homebuying.

Chegg Inc.’s convertible notes remained active with the notes improving outright and continuing to expand dollar-neutral after stock was nearly cut in half the previous session.

Impinj in demand

Impinj’s new convertible notes were in demand during bookbuilding and in the secondary space with the market hungry for new paper.

Impinj priced an upsized $250 million of six-year convertible notes after the market close on Tuesday at par with a coupon of 1.125% and an initial conversion premium of 42.5%.

Pricing came at the midpoint of tightened talk for a coupon of 1% to 1.25% and in line with talk for a fixed initial conversion premium of 42.5%, according to a market source.

Initial talk was for a coupon of 1.25% to 1.75% and an initial conversion premium of 37.5% to 42.5%, according to a market source.

The greenshoe was also upsized to $37.5 million. The initial size of the offering was $225 million with a greenshoe of $33.75 million.

The new paper made large gains on an outright and dollar-neutral, or hedged, basis in the aftermarket.

The 1.125% notes traded as high as 102.5 shortly after the open bell.

They were changing hands around 101.5 about one hour into the session but gained alongside stock as the session progressed.

The notes traded north of 104 heading into the market close.

The notes expanded about 1.5 points on hedge, sources said.

There was more than $46 million in reported volume.

Impinj’s stock traded to a low of $75.35 and a high of $80.75 before closing the day at $80.68, an increase of 3.54%.

Concurrently with the new deal, the company repurchased $76.4 million of the principal amount of its 2% convertible notes due 2026 for $184.2 million in cash.

There were several prints of the 2% convertible notes on the tape at 240.346 early Wednesday.

Zillow down outright

Zillow’s 2.75% convertible notes due 2025 were down outright but up on hedge as stock tanked on the heels of the company’s earnings report.

The 2.75% convertible notes fell almost 19 points outright with stock down almost 25%.

The notes were changing hands at 136 early in the session.

They continued to trend lower as the session progressed and were trading at 130.625 versus a stock price of $66.12 in the late afternoon.

The notes were seen expanded upwards of 1.5 points dollar-neutral early in the session. However, they were seen up only 0.25 point on hedge in the late afternoon, sources said.

There was more than $30 million in reported volume.

Zillow’s stock traded to a high of $76.36 and a low of $63.13 before closing the day at $65.57, a decrease of 24.81%.

Stock tanked after Zillow announced disappointing numbers and an end to its foray into home buying.

Zillow reported losses per share of 95 cents versus analyst expectations for profits of 16 cents.

Revenue was $1.74 billion versus analyst expectations for revenue of $2.01 billion.

Zillow’s net loss of $328 million was the result of its home-buying business unit, which the company announced it was discontinuing on its earnings call, CNBC reported.

Chegg in focus

Chegg’s convertible notes remained active on Wednesday with the notes improved outright and continuing to expand dollar-neutral after stock was nearly cut in half the previous session.

Chegg’s 0% convertible notes due 2026 gained almost 2 points outright.

The notes were up another 0.5 point dollar-neutral, according to a market source.

They were changing hands just shy of 84 versus a stock price of $33.94 in the late afternoon.

There was more than $34 million in reported volume.

Chegg’s 0.125% convertible notes due 2025 were also up almost 2 points outright.

They were changing hands at 102.125 versus a stock price of $34.02 in the late afternoon.

The notes gained another 0.25 point dollar-neutral.

There was more than $31 million in reported volume.

Chegg’s stock traded to a low of $32 and a high of $34.88 before closing the day at $34.08, a decrease of 6.10%.

Stock rebounded after it dropped almost 50% the previous session following a large earnings miss.

While the convertible notes shaved off more than 10 points outright, they saw large dollar-neutral expansions.

Sources saw the 0% convertible notes up 1.5 to 3 points on hedge and the 0.125% convertible notes up 2.5 to 6 points on hedge on Tuesday.

Mentioned in this article:

Chegg Inc. NYSE: CHGG

Impinj Inc. Nasdaq: PI

Perficient Inc. Nasdaq: PRFT

Zillow Group Inc. Nasdaq: Z

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