Cepheid convertibles add on debut; Fluidigm extends gains; secondary sees slow action

By Rebecca Melvin

New York, Feb. 5 - Cepheid's newly priced 1.25% convertibles due 2021 were up between a point and 2 points in late trading Wednesday with shares of the Sunnyvale, Calif.-based molecular diagnostics company off slightly following pricing of the upsized $300 million of seven-year senior notes at the tight end of revised talk.

The Cepheid convertibles were quoted at 101.125 bid, 102.125 offered versus an underlying share price of $49.02. Out of the chute Wednesday, the new Cepheid paper was heard to have traded at 103. Shares had been lower at that point, having hit a low of $48.58 during the session, which was down about 1%.

Fluidigm Corp.'s newer 2.75% convertibles continued their upward trajectory in the market as has been the case since the securities were issued last week. Shares of the South San Francisco-based genomics and DNA research company were also higher amid no particular news, a New York-based trader said.

Like Cepheid, Fluidigm's price talk was tightened during marketing, but the $175 million Fluidigm deal was not upsized.

Herbalife Ltd.'s 2% convertibles due 2019 were not heard in trade Wednesday after the paper dipped below par on their debut in the secondary market on Tuesday. Shares of the Cayman Islands-based nutrition company were higher, however, which may have buoyed the convertible paper.

"We can't get a borrow in it," a New York-based trader said when asked if he had traded the $1 billion Herbalife issue.

Shutterfly Inc. was not heard in trade, but the Redwood City, Calif.-based digital photography products and services company priced a $300 million issue of convertibles last May, and late Wednesday the company reported quarterly results that pushed the underlying shares down 7.4% in after-hours trade.

Shutterfly reported adjusted EBITDA that was 11.5% higher in the last quarter on a 17% increase in net revenue; but its outlook for the current quarter is for adjusted EBITDA in the range of a loss of $1.5 million to income of $0.5 million.

Elsewhere, trading in the secondary market was slow, traders said. Archer-Daniels-Midland Co.'s 0.875% convertible remained a top volume name on the Trace tape ahead of that issue's upcoming maturity. It was flat at 99.95.

Alcoa Inc. was also said to be trading on Wednesday little changed and right around parity, parity plus 0.5 point.

"When it's quiet like this, it seems to be those types of names that trade," a New York-based trader said.

A major winter storm that dumped heavy snow and a wintry mix overnight in the New York metropolitan area may have had a dampening effect on trade. But one market player said that his accounts "seem to be in or logged on from home."

Strong selling that hit the equity markets early in the week settled down on Wednesday, but stocks still ended weaker following mixed economic data.

The addition of 175,000 private-sector jobs in January missed expectations for higher job growth, according to the ADP Employment report published by ADP and Moody's Analytics.

But the Institute for Supply Management's nonmanufacturing purchasing managers' index for January rose to 54 from December's 53, which was better than the forecast of 53.5.

As for the convertibles market on Wednesday, outright investors continued to look at names that had been hit by the sell-off in equities, while hedged investors were "content to watch things go up with the sell-off," a New York-based trader said. "Bonds are opening up."

After the market close, there was one deal on tap. NRG Yield Inc. was expected to price an offering of $300 million of five-year convertibles that was talked to yield 3% to 3.5% with an initial conversion premium of 27.5% to 32.5%. Further details on the deal couldn't be obtained by Prospect News' deadline.

Cepheid adds on debut

Cepheid's newly priced convertibles were quoted at 101.125 bid, 102.125 offered versus an underlying share price of $49.02 late Wednesday. Early Wednesday, the new Cepheid paper was heard to have traded at 103 when the shares were weaker. They hit a low of $48.58, which was down about 1%.

Overall the deal did well, traders said.

"It's got to be trading; there is nothing else going on," a New York-based trader said of Cepheid action. But he added, "I think guys are getting shaky about what this market is trying to do."

Cepheid's deal of seven-year convertibles was upsized to $300 million with a $45 million greenshoe. That was up from an originally talked $250 million offering with a $37.5 million greenshoe.

Pricing came at the tight end of tightened 1.25% to 1.5% coupon talk and an initial conversion premium of 32.5%. Original talk was for a 1.5% to 2% coupon and 27.5% to 32.5% premium.

Proceeds of the seven-year bullet paper will be used for general corporate purposes, including potential acquisitions and strategic transactions, and to pay the cost of the capped call transactions.

Cepheid expects to enter into capped call transactions with one or more of the initial purchasers of the notes or their respective affiliates.

Sunnyvale, Calif.-based Cepheid is a molecular diagnostics company.

Fluidigm continues to climb

Fluidigm's 2.75% convertible bonds were quoted at 111.625 bid, 112.625 offered late Wednesday versus an underlying share price of $45.88.

Fluidigm shares closed up 63 cents, or 1.4%, at $45.32.

"Fluidigm is up again. The stock ripped out of the blue; outright guys buying," a New York-based trader said.

On their debut session last Thursday, the Fluidigm convertibles traded up to 107.75 bid, 108.75 offered with the underlying shares at traded up $43.93.

Price talk was tightened during marketing to a fixed 2.75% coupon and a 35% to 40% initial conversion premium. Initially the deal was talked to yield 2.75% to 3.25% with a 30% to 35% initial conversion premium.

A second market source said the ending mark was a touch higher with shares ending near their intraday highs at $44.58.

Mentioned in this article:

Alcoa Inc. NYSE: AA

Archer-Daniels-Midland Co. NYSE: ADM

Cepheid Nasdaq: CPHD

Fluidigm Corp. Nasdaq: FLDM

Herbalife Ltd. NYSE: HLF

NRG Yield Inc. Nasdaq: NYLD

Shutterfly Inc. Nasdaq: SFLY

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.