Esperion upsizes convertibles; trading muted; Square in focus; Live Nation below par

By Abigail W. Adams

Portland, Me., Nov. 12 – Thursday opened with more new convertible paper entering the space in a high-volume week for primary market activity.

The primary market is expected to remain active during the Nov. 16 week with dealers attempting to get deals done before the Thanksgiving hiatus the following week.

Esperion Therapeutics Inc. priced an upsized offering of $250 million five-year convertible notes after the market close on Wednesday.

However, secondary market activity in the name was muted, which sources attributed to the forward stock purchase agreement that was created due to a difficult borrow.

Meanwhile, the secondary space was active although it continued to trade off its highs from Monday’s rally, a source said.

There was $115 million in reported volume about one hour into the session and $550 million on the tape heading into the market close.

Square Inc.’s newly priced convertible notes remained in focus.

While the notes were coming in on an outright basis as stock gave back its gains from the previous session, they continued to expand dollar-neutral, a source said.

Liberty Media Corp.’s 0.5% notes due 2050 exchangeable for Live Nation Entertainment Inc.’s common stock drifted below par on Thursday.

However, the notes were largely unchanged dollar-neutral and were holding on to their expansion since pricing.

Palo Alto Networks Inc.’s 0.75% convertible notes due 2023 saw some action on Wednesday following news of another acquisition and heading into the company’s earnings.

Esperion upsized

Esperion priced an upsized $250 million offering of five-year convertible notes after the market close on Wednesday at par at the cheap end of talk with a coupon of 4% and an initial conversion premium of 20%.

Price talk was for a coupon of 3.5% to 4% and an initial conversion premium of 20% to 25%, according to a market source.

The initial size of the offering was $200 million.

Trading activity in the new paper was light and is expected to remain that way due, in large part, to the forward stock purchase transaction.

With the borrow on the stock difficult, the company used $55 million of net proceeds to enter into a forward stock purchase agreement with the underwriter to help facilitate hedging activity.

“That kind of thing limits trading,” a source said. “Hedgers have to stick with the underwriter to trade it.”

While secondary activity in the name was light, the new paper was trading up early in the session.

The 4% convertible notes due 2025 traded up to 100.75, a source said early in the session.

Esperion’s stock closed Thursday at $27.83, an increase of 0.91%.

Square in focus

Square’s newly priced convertible notes continued to dominate trading activity on Thursday.

While both tranches were coming in on an outright basis as stock gave back some of its gains from the previous session, they were expanding dollar-neutral.

Square’s 0% convertible notes due 2026 were changing hands at 101.25 early in the session.

They were seen trading at 101.375 versus a stock price of $178.67 in the late afternoon.

There was more than $31 million in reported volume.

The 0.25% convertible notes due 2027 were changing hands at 100.375 early in the session.

They dropped below par and were changing hands at 99.75 in the late afternoon.

There was more than $16 million in reported volume.

Both tranches expanded about 0.5 points dollar-neutral, a source said.

Square’s stock traded to a high of $185.19 and a low of $177 before closing the day at $178.51, a decrease of 2.72%.

Square’s convertible notes largely fell flat on their secondary market debut on Tuesday as stock sold off on a brutal day for tech sector equities.

However, the notes improved on an outright and dollar-neutral basis on Wednesday as tech equities came roaring back.

Live Nation below par

Liberty Media’s 0.5% notes exchangeable for Live Nation common stock dropped below par on Wednesday as stock traded off its highs.

The 0.5% notes were changing hands around 99.625 late Thursday afternoon with stock off a little more than 2%.

While down outright, the notes were largely unchanged dollar-neutral and were holding on to their large dollar-neutral expansion.

Live Nation stock traded to a high of $63.36 and a low of $61.50 before closing the day at $62.24, a decrease of 2.28%.

While unchanged on Thursday, the notes have expanded about 0.5 to 0.75 point since hitting the aftermarket, a source said.

Palo Alto active

Palo Alto’s 0.75% convertible notes due 2023 saw some action on Thursday following news of another acquisition and on the eve of the company’s earnings report.

However, the notes were largely unchanged.

The 0.75% convertible notes were changing hands at 114 with stock off slightly during Thursday’s session.

There was more than $15 million in reported volume.

Palo Alto stock traded to a high of $254.36 and a low of $249.24 before closing the day at $251.96, a decrease of 0.45%.

Stock was giving back some of its gains after climbing more than 4% on Wednesday after announcing it was acquiring cybersecurity firm Expanse for $800 million.

Palo Alto is slated to report earnings prior the market open on Monday.

Mentioned in this article:

Esperion Therapeutics Inc. Nasdaq: ESPR

Live Nation Entertainment Inc. NYSE: LYV

Palo Alto Networks Inc. NYSE: PANW

Square Inc. NYSE: SQ

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