Morning Commentary: Novavax convertible notes crumble on debut as broader equities sink

By Abigail W. Adams

Portland, Me., Dec. 16 – The convertibles primary market priced what many expect to be the last deal of the year after the market close on Thursday.

However, the offering and its secondary market performance was not the note sources had hoped to end the year on.

Novavax Inc. priced an upsized $150 million of five-year convertible notes after the market close on Thursday at the midpoint of talk with a coupon of 5% and an initial conversion premium of 25%.

Price talk was for a coupon of 4.75% to 5.25% and an initial conversion premium of 22.5% to 27.5%.

The greenshoe was also upsized to $25.25 million.

The initial size of the offering was $125 million with a greenshoe of $18.75 million.

While the convertible notes offering was upsized, the size of Novavax’s concurrent secondary offering was reduced.

Concurrently, the company priced a secondary offering of $65 million, or 6.5 million shares at $10.00 per share.

The company initially planned a secondary offering of up to $125 million.

The new paper hit the secondary space amid continued heavy selling in equities with the Dow Jones industrial average down 382 points, or 1.15%, the S&P 500 index down 1.3%, the Nasdaq Composite index down 1.02% and the Russell 2000 index down 1.09% shortly before 11 a.m. ET.

“Markets look like death warmed over,” a source said.

Novavax’s 5% notes plunged on an outright basis.

The notes traded as low as 96.25 pre-open but pared some losses and were changing hands at 98.5 versus a stock price of $9.94 early in the session, according to a market source.

There was $23 million in reported volume.

Novavax’s stock traded to a new 52-week low of $9.36 at the open but regained some footing to trade at $10.20, a decrease of 9.89%, shortly before 11 a.m. ET.

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