Morning Commentary: Planned Novavax is year’s first new convertible, looks a few points cheap

By Rebecca Melvin

New York, Jan. 25 – Novavax Inc.’s planned $200 million of seven-year convertible senior notes looked to have a fair value of about 102 to 103 at the midpoint of talked terms, using a credit spread of 800 basis points over Libor and a 40% vol., according to a market source.

The deal was seen pricing after the market close on Monday and was talked at a 2.75% to 3.25% coupon and a 27.5% to 32.5% initial conversion premium.

Shares of the Rockville, Md.-based biotechnology company were down on the heels of the deal launch early Monday. They were last off 21 cents, or 3.3%, at $6.41.

Market players were eyeing what they considered the long tenor of the bonds at seven years with no interim put. “Guys are just shaking their heads at that one,” the market source said.

Nevertheless, the paper represents the first deal of the year for the convert space, and how it prices will be “a tell-tale sign for converts,” the source said regarding the primary market.

Elsewhere, Whiting Petroleum Corp.’s bonds were under pressure again as crude oil prices retraced some of the gains notched Friday.

Whiting’s 1.25% convertibles traded at 52 in the early going, according to Trace data, against shares for the E&P company that were down 3.6% at $6.38.

© 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.