Sarepta convertibles soar on FDA fast-track status for drug; Bloom Energy regains par

By Abigail W. Adams

Portland, Me., May 15 – The convertibles primary market was quiet on Monday but is not expected to remain so for long as issuers stampede to capital markets ahead of the June 1 U.S. government default deadline.

The investment-grade primary saw a barrage of issuance and the high-yield calendar ballooned on Monday with the convertibles market expected to soon follow suit.

As investors eye a potentially active week for new deal activity, the secondary space was quiet with activity surrounding recent issuance tempering and few making moves amid continued uncertainty.

Equity indexes launched the day either side of unchanged but were lifted into the close with the Dow Jones industrial average closing up 48 points, or 0.14%, the S&P 500 index closing up 0.30%, the Nasdaq Composite index closing up 0.66% and the Russell 2000 index closing up 1.19%.

There was $94 million in reported convertibles trading volume about one hour into the session and $350 million about one hour before the market close with the top three traded issues accounting for about one-quarter of the activity.

Sarepta Therapeutics Inc.’s 1.25% convertible notes due 2027 were the major movers of the session with the notes skyrocketing outright and seeing a large dollar-neutral expansion after the Food and Drug Administration fast-tracked the approval process for a product in its pipeline.

Bloom Energy Corp.’s 3% convertible notes due 2028 fought their way back to par their second day in the secondary space after a volatile aftermarket debut.

Sarepta soars

Sarepta’s 1.25% convertible notes due 2027 were in focus on Monday with the notes surging after an FDA advisory panel fast-tracked the approval process for its muscular dystrophy treatment.

The 1.25% notes jumped 17 points outright with stock up more than 30%.

The convertibles were changing hands just shy of 129 early in the session, a source said.

They climbed to 131.375 in the late afternoon.

The notes expanded 2 points dollar-neutral on the move up, a source said.

There was $33 million in reported volume with the notes the most actively traded issue in the secondary space.

Sarepta’s stock traded to a low of $147.08 and a high of $159.89 before closing at $157.19, an increase of 30.77%.

Stock soared after an FDA advisory committee voted to fast-track the approval process for the biotech’s gene therapy treatment for Duchenne muscular dystrophy.

Sarepta’s convertible notes have been volatile surrounding the approval process for its muscular dystrophy treatment.

Headlines in March about the FDA consulting with the advisory committee regarding the treatment’s approval sent the dollar-price of the convertible notes spiraling to 110 from 130.

The notes were trading around 113 heading into Monday’s session.

While the advisory committee recommended the approval of the treatment, it was a close 8-6 vote.

The final decision is expected by May 29.

Bloom Energy regains par

Bloom Energy’s 3% convertible notes due 2028 regained par their second day in the secondary space after a volatile aftermarket debut last Friday.

The 3% notes climbed about 1 point outright with stock up about 3%.

They were changing hands at 100.75 in the late afternoon.

The notes were moving in line dollar-neutral, a source said.

Bloom Energy’s stock traded to a low of $12.48 and a high of $13.20 before closing at $13.13, up 3.22%.

The notes were volatile on their aftermarket debut last Friday and traded north of 103 out of the gate only to sink as low as 98.75 in intraday activity.

While the notes initially expanded as much as 2.5 points dollar-neutral, they gave back much of those gains although they still retained about a 1 point to 1.5 point expansion, sources said.

Mentioned in this article:

Bloom Energy Corp. NYSE: BE

Sarepta Therapeutics Inc. Nasdaq: SRPT

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