Flexion’s new issue expands; DISH deemed ‘better to buy’ but unchanged; Weatherford adds

By Stephanie N. Rotondo

Seattle, April 28 – For an end-of-the-month session, there was “not a whole lot” going on in the convertible bond market on Friday.

“Volume is very light,” a market source said, adding that valuations were “mostly unchanged.”

The refrain of limited volume was heard across several markets. Overall, it was attributed to the fact that the Women’s Syndicate Association’s spring reception dinner was Thursday night.

But of the day’s dealings, Flexion Therapeutics Inc.’s $175 million of 3.375% convertible senior notes due 2024 continued to do well in Friday trading, a market source reported.

The source said the paper – which closed with a 105 handle post-pricing on Thursday – had “expanded about half a point on a dollar-neutral basis” by mid-morning.

The company’s shares had improved after the deal came, but in Friday trading, the equity declined 53 cents, or 2.53%, to $20.41.

The deal came late Wednesday, upsized from $125 million and with an initial conversion premium of 30%. Yield came in the middle of the 3.125% to 3.625% price talk.

Wells Fargo Securities LLC, BMO Capital Markets and RBC Capital Markets were the bookrunners on the Rule 144A deal.

Meanwhile, DISH Network Corp.’s convertibles were “still active,” a trader said.

“They look better to buy, but still unchanged on a dollar-neutral basis,” he said.

The 3.375% convertible notes due 2026 were pegged at 122.325 at another shop, which was down a point from previous trades.

Another source placed the issue in a 122.125 to 122.5 context.

As for the 2.375% convertible notes due 2024, they were about unchanged, though less active than the 3.375% convertibles, a source reported.

The paper ended at 104 bid, 104.5 offered.

The underlying stock was meantime off 57 cents at $64.43.

The satellite TV services provider is scheduled to release earnings on Monday. The market is also hoping to get some clue as to what the company plans to do with its massive inventory of wireless spectrum.

In other earnings news, Weatherford International plc reported its results on Friday. The results were mixed, but investors seemed pleased with comments made by Mark A. McCollum, the company’s new chief executive officer.

Weatherford up despite loss

Weatherford International’s 5.875% exchangeable senior notes due 2021 pushed higher on Friday, despite the company reporting a loss for the first quarter.

The exchangeables were seen trading in a range of 119.5 to 121.5, though the paper ended the session closer to the lower end.

Still, that was up about 2 points on the day.

The equity also improved, rising 15 cents, or 2.67%, to $5.77.

For the quarter, Weatherford reported a loss of $448 million, or 45 cents per share.

On an adjusted basis, the loss per share came to 32 cents.

Revenue was $1.39 billion.

Analysts polled by Zacks Investment Research had forecast a loss per share of 31 cents on revenue of $1.37 billion.

The earnings release came at the end of McCollum’s first week as CEO. But the former chief financial officer of Halliburton tried to assure investors that the company had sufficient liquidity and that it was on track to reduce its debt to $3 billion sooner than its 2020 target.

“Bottom line, not a pretty quarter, but with an improving business outlook and a ‘process guy’ in charge, the opportunity for recovery is real,” wrote Gimme Credit LLC analyst Philip C. Adams in a comment published Friday.

Anthem’s disappointment

Anthem Inc.’s 5.25% equity units due 2018 (NYSE: ANTX) spent most of the day in the red but managed to finish slightly positive.

The units closed 6 cents higher at $51.38.

The underlying equity, however, dropped 41 cents to $177.89.

It was reported on Friday that Anthem had lost its appeal seeking to overturn the rejection of its proposed $48 billion merger with Cigna Corp.

A lower court had previously ruled against the combination due to antitrust concerns. That then led Anthem and Cigna to go after each other, with Cigna looking to break its agreement and Anthem arguing that Cigna undermined their defense of the deal.

Great Ajax lists

Great Ajax Corp.’s $76.25 million of 7.25% $25-par convertible senior notes due 2024 began trading on the New York Stock Exchange on Friday, a market source reported.

The ticker symbol is “AJXA.”

At the close, the notes were seen at $25.30, which was down 4 cents from the open.

The deal priced April 20 with a 17.5% initial conversion premium and upsized from $75 million.

Price talk was for a yield of 7% to 7.5% with an initial conversion premium of 15% to 20%.

Raymond James & Associates Inc. and JMP Securities LLC were the bookrunners.

Great Ajax is a Beaverton, Ore.-based real estate investment trust.

Mentioned in this article:

Anthem Inc. NYSE: ANTM

DISH Network Corp. Nasdaq: DISH

Flexion Therapeutics Inc. Nasdaq: FLXN

Great Ajax Corp. NYSE: AJX

Weatherford International plc NYSE: WFT

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