NIO convertible offering on deck; Duke active; PTC Therapeutics decline continues

By Abigail W. Adams

Portland, Me., Sept. 18 – The convertibles primary market returned to action on Monday with the week expected to be active after a lull the previous week.

NIO Inc. plans to price a $1 billion two-tranche offering of six- and seven-year convertible notes after the market close on Tuesday, according to a market source.

The offering consists of a $500 million tranche of six-year convertible notes with price talk for a coupon of 3.5% to 4% and an initial conversion premium of 27.5% to 32.5%.

The deal also includes a $500 million tranche of seven-year convertible notes with price talk for a coupon of 4.25% to 4.75% and an initial conversion premium of 27.5% to 32.5%.

Goldman Sachs & Co. LLC, Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC and China International Capital Corp. are bookrunners for the Rule 144A offering.

Meanwhile, it was a quiet start to the week in the convertibles secondary space with equity indexes either side of unchanged as markets await the Federal Open Market Committee’s Wednesday announcement.

The Dow Jones industrial average closed Monday up 6 points, or 0.02%, the S&P 500 index closed up 0.07%, the Nasdaq Composite index closed up 0.01% and the Russell 2000 index closed down 0.69%.

Convertibles trading volume was light as activity surrounding recent issues continued to settle with the “usual suspects,” or investment-grade issues once again taking center stage.

Duke Energy Corp.’s 4.125% convertible notes due 2026 (Baa2/BBB) dominated the tape although with little movement in price.

Seagate HDD Cayman’s 3.5% exchangeable notes due 2028 continued to trade with the notes slightly weaker on a strong day for stock.

While PTC Therapeutics Inc.’s 1.5% convertibles due 2026 were quiet on Monday, they remained under pressure as losses continued to mount for the company’s stock.

Duke active

With activity surrounding new and recent issues petering out, investment-grade convertible notes returned to focus with Duke Energy’s 4.125% convertible notes due 2026 dominating the tape.

While the notes saw heavy trading volume, there was little movement in price with the notes continuing to trade on a 98-handle.

The notes were wrapped around 98.625 in the late afternoon, according to a market source.

There was $30 million in reported volume.

Duke Energy’s stock traded to a low of $94.16 and a high of $95.46 before closing at $94.96, down 0.23%.

Seagate weaker

Seagate’s recently priced 3.5% exchangeable notes were slightly weaker on a green day for stock.

The 3.5% notes were off about 0.375 point outright with stock up more than 1% in intraday activity.

The notes were seen at 101.625 early in the session and 101.875 in the late afternoon, according to a market source.

There was $5 million in reported volume.

Seagate’s stock traded to a low of $63.59 and a high of $64.87 before closing at $64.23, off 0.75%.

PTC downfall continues

PTC Therapeutics’ 1.5% convertibles due 2026 were quiet on Monday after the notes logged double-digit losses last Friday.

While volume in the issue remained light, the notes remained under pressure as losses continued to mount for the company’s stock.

The 1.5% notes traded down another 4 points outright with stock off almost 8%.

The notes saw an odd lot trade at 80.5 in the mid-afternoon, a source said.

PTC’s stock traded to a low of $23.82 and a high of $25.17 before closing at $24.28, a decrease of 7.54%.

The 1.5% notes plunged from a balanced convertible note to busted territory last Friday as stock plunged 42%.

The notes sank almost 18 points outright last Friday to close the day at 84.25, according to a market source. They entered that session on a 102-handle.

The notes contracted 1.5 to 2 points dollar-neutral on the move down, a source said.

The yield jumped to 7.5%.

The biopharmaceutical company’s capital structure collapsed after European regulators issued a negative opinion of PTC’s treatment for muscular dystrophy and voted against renewing conditional approval.

PTC has been in the crosshairs since May when it announced after a failed clinical trial that it was discontinuing its gene therapy programs.

Mentioned in this article:

Duke Energy Corp. NYSE: DUK

NIO Inc. NYSE: NIO

PTC Therapeutics Inc. Nasdaq: PTCT

Seagate Technology Holdings plc Nasdaq: STX

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