Innovative Industrial expands on debut; Inovio below par; Booking, Western Digital eyed

By Abigail W. Adams

Portland, Me., Feb. 15 – The convertibles secondary market opened Friday with more new paper entering the space.

Innovative Industrial Properties Inc. priced an upsized $125 million of five-year exchangeable notes prior to the market open on Friday.

The new paper dominated activity in the secondary space and was expanded on debut, sources said.

Activity was light outside of the new paper with few notable movements in the secondary space, sources said.

Inovio Pharmaceuticals, Inc.’s 6.5% convertible notes due 2024 dropped below par on Friday while trading of the new paper remained light.

Booking Holdings Inc.’s 0.9% convertible notes due 2021 and Western Digital Corp.’s 1.5% convertible notes due 2024 were major volume movers in the secondary space although the notes were largely unchanged, a market source said.

Innovative expands

Innovative Industrial Properties priced an upsized $125 million of five-year exchangeable notes prior to the market open on Friday at the cheap end of talk with a coupon of 3.75% and an initial exchange premium of 15%, according to a company news release.

Price talk had been for a coupon of 3.25% to 3.75% and an initial exchange premium of 15% to 20%, according to a market source.

There is an $18.75 million greenshoe.

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

The deal size was initially $100 million with a greenshoe of $15 million.

It is rare for a deal to be upsized and price at the cheap end of talk, a market source said.

However, the new paper was performing “extremely well” in the secondary space, the source said.

The 3.75% notes traded up to 103 on an outright basis before the opening bell. They were changing hands between 103.5 and 104 early in Friday’s session.

The notes shot north of 105 later in the afternoon as stock continued its climb, sources said.

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

With more than $35 million of the bonds on the tape by the late afternoon, the 3.75% notes were the most actively traded issue in the secondary space on Friday.

Innovative Industrial Properties stock popped early Friday after getting crushed on Thursday, a market source said.

Stock traded to a low of $62.61 and a high of $65.80 before closing the day at $64.99, an increase of 7.42%.

Inovio below par

Inovio Pharmaceuticals’ 6.5% convertible notes due 2024 dropped below par in light trading volume on Friday, according to a market source.

The notes were changing hands around 99.25 on Friday. There were about $4.5 million of the bonds on the tape by the late afternoon, according to a market source.

Inovio stock was largely unchanged on Friday after tanking more than 20% during Thursday’s session.

Inovio stock closed the day at $3.70, an increase of 0.27%.

The notes were largely wrapped around par on their market debut on Thursday although few bonds traded.

Inovio priced $65 million of the 6.5% notes in an overnight deal prior to the market open on Thursday.

The new notes were not expected to see much trading activity due to the size of the issue.

Volume movers

Booking Holdings’ 0.9% convertible notes due 2021 were major volume movers in the secondary space on Friday although with little notable movement in price.

The 0.9% convertible notes were seen changing hands at 116 versus an equity price of $1,922.34. More than $17.5 million of the bonds were on the tape by the late afternoon.

The notes were largely trading flat, a market source said.

Booking Holdings stock closed Friday at $1,933.57, an increase of 1.64%.

Western Digital’s 1.5% convertible notes due 2024 were again major volume movers in the secondary space although with little notable movement in price.

The 1.5% notes were trading at 88.2 versus an equity price of $47.76, according to a market source.

More than $11 million of the bonds were on the tape by the late afternoon.

Western Digital stock closed Friday at $47.65, an increase of 0.69%.

Mentioned in this article:

Booking Holdings Inc. Nasdaq: BKNG

Innovative Industrial Properties Inc. NYSE: IIPR

Inovio Pharmaceuticals, Inc. Nasdaq: INO

Western Digital Corp. Nasdaq: WDC

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