Convertibles secondary better to buy; Inotiv jumps on debut; Bill.com, RBC Bearings up

By Abigail W. Adams

Portland, Me., Sept. 23 – The convertibles secondary space was active on Thursday as equity markets erased their losses and turned positive on the week following the Federal Reserve’s Thursday announcement regarding the roll-back of fiscal stimulus.

The Dow Jones industrial average closed the day up 506 points, or 1.48%, the S&P 500 index closed up 1.21%, the Nasdaq Composite closed up 1.04% and the Russell 2000 index was up 1.86%.

“It was a lift-athon this morning,” a source said.

The overall market remained better to buy as markets regained their risk-on sentiment.

There was $227 million in reported volume shortly before 11 a.m. ET and $776 million on the tape heading into the market close.

New and recent issues remained in focus and continued to put in strong performances.

In the last new deal of the week, Inotiv Inc. priced an upsized $125 million of six-year convertible notes after the market close on Wednesday.

The new paper jumped on an outright and dollar-neutral basis in high-volume activity.

Bill.com Holdings Inc.’s 0% convertible notes due 2027 and RBC Bearings Inc.’s 5% mandatory convertible preferred stock continued to gain their second day in the secondary space.

Beauty Health Co.’s (BeautyHealth) recently priced 1.25% convertible notes due 2026 were again active on Thursday with the notes continuing to gain on an outright and dollar-neutral basis.

Inotiv in focus

Inotiv priced an upsized $125 million of six-year convertible notes after the market close on Wednesday at par with a coupon of 3.25% an initial conversion premium of 35%.

Pricing came at the midpoint of talk for a coupon of 3% to 3.5% and at the rich end of talk for an initial conversion premium of 30% to 35%.

While the offering was upsized, the greenshoe was downsized to $15 million. The offering was initially slated to be $110 million with a greenshoe of $16.5 million.

The new paper was putting in a strong performance in the secondary space.

The notes traded up to 102.5 on an outright basis with stock off early in the session.

The convertibles continued to gain as stock improved and were changing hands at 104.5 versus an equity price of $33.84 in the late afternoon.

The notes expanded 2 to 2.5 points dollar-neutral, a source said.

While the issue was small, the notes dominated activity in the secondary space with more than $65 million in reported volume heading into the close.

Inotiv’s stock traded to a high of $34.22 and a low of $32.81 before closing the day at $33.71, a decrease of 1.17%.

Day 2

Bill.com’s 0% convertible notes due 2027 and RBC Bearings’ 5% mandatory convertible preferred stock continued to gain their second day in the secondary space.

Bill.com’s 0% convertible notes were up another 2.5 points outright as stock wavered between gains and losses during Thursday’s session.

The 0% notes were changing hands at 106.5 versus a stock price of $276.39 in the late afternoon.

They were up another 0.25 point dollar-neutral.

Bill.com’s stock traded to a low of $266.54 and a high of $279.29 before closing the day at $276.90, an increase of 1.05%.

The 0% notes were a blowout during bookbuilding and made large gains on an outright and dollar-neutral basis on their aftermarket debut.

The notes expanded about 4 points dollar-neutral on Wednesday.

RBC’s 5% mandatory convertible preferred stock jumped on an outright and dollar-neutral basis.

The mandatories were up more than 10 points outright to trade as high as 114 in the late afternoon.

They expanded about 0.25 point dollar-neutral.

RBC’s stock traded to a high of $226.53 and a low of $204.42 before closing the day at $216.72, an increase of 8.59%.

While RBC’s mandatories were up 5 points outright on their aftermarket debut on Wednesday, they were contracted 0.25 to 0.5 point dollar-neutral, a source said.

BeautyHealth gains continue

BeautyHealth’s 1.25% convertible notes due 2026 were once again active in the secondary space on a strong day for the company’s stock.

The notes were making gains on an outright and dollar-neutral basis.

The convertibles traded up about 3 points outright with stock up more than 4%.

They were changing hands at 115.375 versus a stock price of $28.11.

The notes expanded about 0.5 point dollar-neutral, a source said.

There was more than $22 million in reported volume.

BeautyHealth’s stock traded to a high of $28.62 and a low of $27.16 before closing the day at $28.26, an increase of 4.2%.

The 1.25% convertible notes have outperformed since the company priced the $750 million issue on Sept. 9.

Mentioned in this article:

Beauty Health Co. Nasdaq: SKIN

Bill.com Holdings Inc. NYSE: BILL

Inotiv Inc. Nasdaq: NOTV

RBC Bearings Inc. Nasdaq: ROLL

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