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Morning Commentary: Medicines prices new convertible notes; outstanding issues come in
By Abigail W. Adams
Portland, Me., Dec. 14 – The first new convertible notes deal of the month priced after the market close on Thursday. However, the paper was not active early in Friday’s session.
Medicines Co. priced $150 million of five-year convertible notes after the market close on Thursday at par with a coupon of 3.5% and an initial conversion premium of 27.5%, according to a company news release.
Pricing came at the cheap end of talk for a coupon of 3% to 3.5% and at the midpoint of talk for an initial conversion premium of 25% to 30%, according to a market source.
The new paper was not seen on the tape early in Friday’s session, according to a market source.
With Sarissa Capital Management LP, an affiliate of board chairman Alexander J. Denner, buying $20 million of the notes, the deal was small, a market source said.
While volume was light, Medicines’ outstanding convertible notes were down on an outright basis after the pricing of the new deal.
The 2.75% convertible notes due 2023 dropped about 2 points to 77, according to Trace data.
The company’s 2.5% convertible notes due 2022 traded down about 3 points to 87.
Sources were surprised to see a new convertible notes offering from Medicines, but the consensus was the company needed the money.
“The problem with them is timing,” a market source said.
The 2.5% notes, which have $400 million outstanding, are coming due in 2022 when the first big news is expected for Inclisiran, a cholesterol medication, the source said.
Proceeds from the new convertible notes offering will be used to support the development of Inclisiran.
With a maturity date coinciding with the study completion date for Inclisiran, the name is “going to get a little funky,” the source said.
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