Innovative eyed; 8x8 hits market, expands on debut; Inovio wrapped around par; Invacare jumps

By Abigail W. Adams

Portland, Me., Feb. 14 – New convertibles paper was in focus on Thursday with two new deals hitting the secondary space and one more deal on deck.

Innovative Industrial Properties Inc. plans to price $100 million of five-year exchangeable notes after the market close on Thursday.

The deal modeled cheap and was heard to be doing well during bookbuilding, sources said. However, the audience for the deal is limited.

8x8 Inc. priced an upsized $250 million of five-year convertible notes after the market close on Wednesday. The new paper dominated activity in the secondary space and expanded on debut.

Inovio Pharmaceuticals, Inc. priced $65 million of five-year convertible notes prior to the market open on Thursday. Trading of the notes was limited in the secondary space.

However, the notes were largely wrapped around par.

Outside of 8x8, trading volume in the secondary space was extremely light, a market source said.

8x8 accounted for more than 25% of the $440 million in trading volume on the tape by the late afternoon, a market source said.

While volume was light, Invacare Corp.’s 4.5% convertible notes due 2022 made large outright gains as stock soared after its fourth-quarter earnings report.

Innovative Industrial eyed

Innovative Industrial Properties plans to price $100 million of five-year exchangeable 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 15% to 20%, according to a market source.

The notes will be issued by subsidiary IIP Operating Partnership, LP and exchangeable into Innovative Industrial Properties stock.

The deal was heard to be in the market with a credit spread of 500 bps over Libor and a 35% vol., a market source said.

Assuming a tough borrow rate of 4%, the deal modeled about 1.75 points cheap at the midpoint of talk, according to a market source.

Assuming a regular borrow, the deal modeled up to 8 points cheap, another source said.

The deal was priced well, especially for outright accounts, a market source said.

The deal is small and Innovative Industrial Properties is a real estate investment trust that serves the cannabis sector, which limits its audience, a source said.

However, the deal was heard to be doing well during bookbuilding. It is expected to price at the midpoint of talk, a source said.

8x8 expands

8x8 priced an upsized $250 million of five-year convertible notes after the market close on Wednesday at par with a coupon of 0.5% and an initial conversion premium of 30%.

Pricing came at the rich end of talk for a coupon of 0.5% to 1% and at the midpoint of talk for an initial conversion premium of 27.5% to 32.5%, according to a market source.

The new paper dominated activity in the secondary space and expanded on debut.

While stock got caught in the sell-off shortly after the opening bell, the 0.5% convertible notes held above par, a market source said.

Stock quickly rebounded and the 0.5% notes were trading between 100.625 and 101 during Thursday’s session with stock flat to down slightly, according to market sources.

The notes were expanded 0.75 to 1 point dollar-neutral, a market source said.

More than $68 million of the bonds were on the tape less than one hour into Thursday’s session.

There was more than $119 million of the bonds on the tape by the late afternoon, accounting for more than 25% of the total trading volume during Thursday’s session.

8x8 stock traded to a low of $19.12 shortly after the opening bell but closed the day at $19.78, an increase of 0.15%.

Inovio at par

Inovio Pharmaceuticals priced $65 million of five-year convertible notes prior to the market open on Thursday at the cheap end of talk with a coupon of 6.5% and an initial conversion premium of 15%.

Price talk had been for a coupon of 6% to 6.5% and an initial conversion premium of 15% to 20%, according to a market source.

The deal was slow to trade in the secondary space, which is to be expected given its size, a market source said.

However, the few trades on the tape were wrapped around par despite stock tanking early in the session, the source said.

There were four prints on the tape by the late afternoon with each print at par, a market source said. The trading activity appeared to be mostly outright, a source said.

Inovio stock was down more than 20% during Thursday’s session, closing the day at $3.685, a decrease of 21.26%.

Invacare jumps

Invacare’s 4.5% convertible notes due 2022 jumped on Thursday as stock soared after the company reported fourth-quarter earnings.

The 4.5% convertible notes rose almost 20 points outright during Thursday’s session.

They were seen changing hands just shy of 89 versus a stock price of $8.57 in the late afternoon, according to a market source.

The 4.5% notes closed the day around 90.75, another source said. About $5 million of the bonds changed hands during Thursday’s session.

Invacare stock traded as high as $9.54 during Thursday’s session but closed the day at $8.61, an increase of 61.84%.

The medical equipment company beat on both the top and bottom lines in its fourth-quarter earnings report.

Invacare reported a loss per share of 16 cents versus analyst expectations for a loss per share of 42 cents. Revenue was $244.60 million, which beat analyst expectations of $239.22 million.

Mentioned in this article:

8x8 Inc. NYSE: EGHT

Innovative Industrial Properties Inc. NYSE: IIPR

Inovio Pharmaceuticals, Inc. Nasdaq: INO

Invacare Corp. NYSE: IVC

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