Cree convertibles expand on debut, outstanding notes active; Dick’s, Burlington firm

By Abigail W. Adams

Portland, Me., April 17 – New convertible paper remained in focus on Friday as the last new deal of the week made its secondary market debut.

Cree Inc. priced $500 million of six-year convertible notes after the market close on Thursday.

The new paper dominated activity in the secondary space and traded up on an outright and dollar-neutral basis.

Cree’s 0.875% convertible notes due 2023 were also active on the heels of a buyback of a portion of the notes.

Several other deals that priced over the past week were posting gains in active trading with the overall convertible space firm as equities rallied due to optimism a treatment for Covid-19 was near-at-hand.

Dick’s Sporting Goods, Inc.’s 3.25% convertible notes due 2025 recouped their losses from the previous session with the notes trading back above par and expanding dollar-neutral.

Burlington Stores Inc.’s 2.25% convertible notes due 2025 continued to soar on an outright and dollar-neutral basis.

Coherus BioSciences, Inc.’s 1.5% convertible notes due 2026 were also improved in active trading.

Cree in focus

Cree priced $500 million of six-year convertible notes after the market close on Thursday at par at the rich end of talk with a coupon of 1.75% and an initial conversion premium of 32.5%.

Price talk was for a coupon of 1.75% to 2.25% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

The new paper was in focus in the secondary space and saw a large dollar-neutral expansion.

The 1.75% notes were changing hands at 102 with stock off slightly early in the session, a market source said.

They were changing hands around 102.5 in the late afternoon and were expanded 3 points dollar-neutral, a market source said.

However, the notes came in heading into the close and ended the day up 2.625 points dollar-neutral, another source said.

The notes were in focus with more than $137 million in reported volume.

Cree’s 0.875% convertible notes due 2023 were also active on Friday following a buyback of a portion of the notes.

Approximately $144.3 million of the proceeds of the new offering were used to repurchase $150.2 million of the principal amount of the company’s 0.875% convertible notes due 2023, which includes $200,000 in accrued interest.

Sellers of the notes got paid 95.932 versus a stock price of $35.71 for the notes, a market source said.

The 0.875% notes were changing hands between 95.25 and 95.75 during the session.

Cree stock traded to a low of $35.10 and a high of $35.85 before closing the day at $35.40, a decrease of 0.87%.

Dick’s firms

Dick’s Sporting Goods’ 3.25% convertible notes due 2025 recouped their losses from the previous session.

After trading as low as 97.25 on Thursday, the notes popped back above par in active trading on Friday.

The notes traded as high as 101.625 but came in and were seen changing hands at 100.25 in the late afternoon.

The notes expanded about 0.5 point dollar-neutral, erasing their 0.5 point contraction on Thursday, sources said.

Dick’s stock traded to a low of $25.09 and a high of $26.72 before closing the day at $26.49, an increase of 7.03%.

Burlington soars

Burlington’s 2.25% convertible notes due 2025 continued to climb higher on an outright and dollar-neutral basis on Friday.

The notes traded up 2 points outright to a 107-handle on Friday. They expanded another 0.5 point dollar-neutral, a market source said.

Burlington stock traded to a low of $175.94 and a high of $185.00 before closing the day at $182.61, an increase of 4.05%.

The 2.25% notes from the off-price department store retailer have outperformed since hitting the secondary space on Tuesday with the notes expanding more than 3 points dollar-neutral.

Coherus improves

Coherus BioSciences’ 1.5% convertible notes due 2026 were also improving in active trading on Friday.

The 1.5% notes traded as high as 104 but stood poised to close the day at 101.875.

The notes were up 0.5 point dollar-neutral in intraday trading.

Coherus BioSciences stock traded to a low of $14.98 and a high of $15.64 before closing the day at $15.53, an increase of 3.53%.

Stock was on the rise on Friday after SunTrust initiated coverage of the company with a buy rating and a $26.00 price target for the stock.

Mentioned in this article:

Burlington Stores Inc. NYSE: BURL

Coherus BioSciences, Inc. Nasdaq: CHRS

Cree Inc. Nasdaq: CREE

Dick’s Sporting Goods, Inc. NYSE: DKS

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