Morning Commentary: Planned Pinduoduo convertible notes in focus; Exact Sciences eyed

By Rebecca Melvin

New York, Sept. 24 – An offering by Pinduoduo Inc. was in focus in U.S. convertibles early Tuesday and looking cheap after the China-based e-commerce platform announced that it is pricing $875 million five-year convertible notes.

Using a credit spread of 350 basis points over Libor and 40% vol., the Rule 144A and Regulation S deal looked to be worth 103.81 at the midpoint of price talk, according to a New York-based market source.

The deal was being talked at a coupon range of 0% to 0.25% and an initial conversion premium of 32.5% to 37.5%. Final terms were expected to be set after the market close on Tuesday.

A second source’s valuation was very close to that one and noted that the Pinduoduo American Depositary Shares were the most actively traded health care name on Monday after Exact Sciences Corp.

On Monday, Exact Sciences’ 0.375% convertible notes due 2027 moved up almost 2 points outright in active trade on Monday to 119.4, according to Trace data.

Pinduoduo’s American Depositary Shares on the Nasdaq stock exchange were down $1.15, or 3.4%, at $32.67 in morning trade.

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