AMAG deal comes upsized, cheap; HubSpot ‘aggressively priced’; Herbalife edges higher

By Stephanie N. Rotondo

Seattle, May 5 – The convertible bond market got some new issues to play with on Friday.

AMAG Pharmaceuticals Inc. sold $300 million of 3.25% convertible senior notes due 2022, while HubSpot Inc. priced $350 million of 0.25% convertible senior notes due 2022.

For its part, the AMAG deal came upsized from $250 million and with an initial conversion premium of 37.5%. The terms were cheap to the initial price talk of a 2.75% to 3.25% yield and a conversion premium of 37.5% to 42.5%.

As for HubSpot, its terms were on the rich end of revised price talk of a 0.25% to 0.5% yield but were in line with premium talk of 35%.

Initially, price talk on the Rule 144A offering was 0.5% to 1% with a conversion premium of 30% to 35%.

Additionally, the HubSpot deal was increased from $300 million.

J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC ran the AMAG deal. BofA Merrill Lynch, Morgan Stanley and JPMorgan were bookrunners for HubSpot.

One sellside source opined that the HubSpot deal was “aggressively priced,” seeing the issue trading “right around par” for most of the session.

The trader also said he believed the paper was “over-allocated,” though he added that sellers were starting to clear out toward the end of the day and long-only buyers were coming in.

Post-pricing, AMAG’s stock was off 80 cents, or 4.02%, at $19.10. HubSpot’s shares were initially weaker but finished up 50 cents at $70.70.

Meanwhile, Herbalife Ltd.’s 2% convertible notes due 2019 were slightly better on the day after the company reported better-than-expected earnings.

“On a dollar price basis, it’s finally crossing par,” one trader said.

Herbalife heads higher

Herbalife’s 2% convertibles were faring better in the wake of the company’s late Thursday earnings release.

A trader saw the issue at 102.5 at the bell. Another market source said the notes hit highs of 102.5, but mostly traded in a 101.5 to 102 context.

Herbalife’s equity jumped $7.20, or 11.58%, to $69.40.

For the quarter, the nutritional supplement distributor posted earnings per share of $1.24 on revenue of $1.1 billion.

By comparison, Herbalife reported EPS of $1.36 on revenue of $1.12 billion for the same quarter of 2016.

Analysts polled by Thomson Reuters had expected EPS of 89 cents on revenue of $1.05 billion.

The company also said it was raising its guidance on its reported and adjusted EPS for the full year. The new guidance is reported EPS of $3.25 to $3.65 and adjusted EPS of $4.05 to $4.45.

Previously, the company had provided guidance of $2.95 to $3.35 and $3.65 to $4.05, respectively.

Consensus estimates are forecasting full-year EPS of $3.96 on revenue of $4.54 billion.

Mentioned in this article:

AMAG Pharmaceuticals Inc. Nasdaq: AMAG

Herbalife Ltd. NYSE: HLF

HubSpot Inc. NYSE: HUBS

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