Pacira BioSciences on tap; technology names in focus; China-based convertibles gain

By Abigail W. Adams

Portland, Me. July 6 – The convertibles primary market saw an active start to what sources largely expect to be a sluggish week with one deal joining the forward calendar.

Pacira BioSciences Inc. plans to price $300 million of five-year convertible notes after the market close on Tuesday with price talk for a coupon of 0.75% to 1.25% and an initial conversion premium of 30% to 35%, according to a market source.

J.P. Morgan Securities LLC, Jefferies LLC, RBC Capital Markets Corp. and Piper Sandler Co. are bookrunners for the Rule 144A offering, which carries a greenshoe of $45 million.

Proceeds will be used to repurchase a portion of the company’s 2.375% convertible notes due 2022 in privately negotiated transactions.

Meanwhile, volume remained light in the convertibles secondary space. However, the market was firm as equities continued their upward momentum.

“Everything’s better to buy,” a market source said.

The Dow Jones industrial average closed the day up 459 points, or 1.78%, and the S&P 500 index closed up 1.59%.

The Nasdaq composite again broached an all-time high, closing the day up 226 points, or 2.21%, at 10,433.65.

Equities climbed after the Shanghai Composite index saw its largest advance since 2015.

While the overall market was firm, tech names and the convertible notes of China-based companies were the largest benefactors of Monday’s session.

Akamai Technologies Inc.’s convertible notes saw heavy volume during Monday’s session as stock wavered between gains and losses.

Zscaler Inc.’s 0.125% convertible notes due 2025 continued to rise alongside stock in active trading.

The convertible notes of China-based companies were also “up, up and away” on Monday, a source said.

iQIYI Inc.’s convertible notes were among those making gains.

Nio Inc.’s 4.5% convertible notes due 2024 skyrocketed with the notes now trading in the 130s after struggling in distressed territory a few months ago.

Tech names in focus

Tech names were in focus on Monday as the Nasdaq composite again broached an all-time high.

Akamai’s convertible notes saw heavy volume on an otherwise light-volume day in the secondary space.

The 0.125% convertible notes were among the most actively traded of Monday’s session with the notes continuing to change hands around 130.

Akamai’s 0.375% notes due 2027 also saw some action with the notes trading at 114.625 in the late afternoon, according to a market source.

Akamai stock traded to a high of $116.39 and a low of $111.88 before closing the day at $112.61, a decrease of 0.45%.

Zscaler’s 0.125% convertible notes due 2025 continued to rise on an outright basis as stock shot up early in the session.

The 0.125% notes traded north of 107 with stock up almost 10%. However, the notes came in alongside stock and were changing hands around 105.625 in the mid-afternoon.

The notes were largely moving in line on a dollar-neutral, or hedged, basis, a market source said.

Zscaler stock traded to a high of $121.46 and a low of $112.50 before closing the day at $114.78, an increase of 4.15%.

Stock surged following the latest analyst upgrade of stock.

RBC Capital Markets initiated coverage of the cyber-security company with an outperform rating and a price target of $130.00.

The majority of companies on Barron’s recently issued list of recommended tech stocks were recent convertible bond issuers, a market source said.

China-based convertibles up

The convertible notes of China-based companies were also on the rise on Monday as the Shanghai Composite index saw its largest single-day gain since 2015 as a bullish sentiment pervaded the markets.

iQIYI’s 2% convertible notes due 2025 popped back above par on Monday.

The notes traded as high as 103 early in the session but closed the day around 102.

The Beijing-based video streaming platform’s 3.75% convertible notes due 2023 traded up to 110.5.

iQIYI’s ADS traded to a high of $25.66 and a low of $23.44 before closing the day at $23.94, an increase of 0.5%.

After floundering in distressed territory for most of the year, Nio’s 4.5% convertible notes due 2024 continued their remarkable recovery on Monday.

The 4.5% notes skyrocketed more than 15 points outright.

They traded as high as 137 during Monday’s session before closing the day at 131.75, sources said.

The notes were trading in the low 30s as recently as March.

The Shanghai-based electric car manufacturer’s equity continued to rip on Monday.

Nio’s ADS traded to a high of $12.30 and a low of $10.93 before closing the day at $11.51, an increase of 22.71%.

Stock has been on a tear over the past few sessions following a better-than-expected June sales report.

The company’s recent rebound may also have been fueled by Tesla’s recent bull run with Tesla now the largest market cap car company in the world.

Mentioned in this article:

Akamai Technologies Inc. Nasdaq: AKAM

iQIYI Inc. Nasdaq: IQ

Nio Inc. NYSE: NIO

Pacira BioSciences Inc. Nasdaq: PCRX

Zscaler Inc. Nasdaq: ZS

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