Morning Commentary: TPG Specialty, Canopy price; Intelsat up 12 points dollar neutral

By Abigail W. Adams

Portland, Me., June 15 – Despite an influx of new paper over the past week, trading volume was relatively light early in Friday’s session, a market source said.

TPG Specialty Lending, Inc. priced a $50 million add-on to its 4.5% convertible senior notes due 2022 after the market close on Thursday at the cheap end of talk with a reoffer price of 100.5.

The 4.5% notes were seen trading below the reoffer price early in the session.

Canopy Growth Corp. priced an upsized C$500 million of five-year convertible notes prior to the market open on Friday at the rich end of talk with a coupon of 4.25% and an initial conversion premium of 25%.

Price talk had been for a coupon of 4.25% to 4.75% and an initial conversion premium of 20% to 25%, according to a market source.

The Rule 144A and Regulation S deal was not seen on the tape early in Friday’s session, sources said.

Intelsat SA’s newly priced 4.5% convertible notes due 2025 continued to expand on Friday with the notes up 12 points dollar neutral since issuance, a market source said.

AMAG Pharmaceuticals Inc.’s 3.25% convertible notes due 2022 were in focus on Friday and making gains on a dollar-neutral basis after the company announced its divestiture from its subsidiary, Cord Blood Registry.

TPG’s add-on

TPG priced a $50 million add-on to its 4.5% convertible notes due 2022 at the cheap end of talk with a reoffer price of 100.5. Talk had been for a price of 100.5 to 101, according to a market source.

The add-on, which priced shortly after it was announced, spurred some activity in the 4.5% convertible senior notes due 2022 on Friday.

The notes were seen trading below their reoffer price of 100.5 with customers selling the notes for 100.357.

However, there were some odd-lot trades on the tape that were higher. “They’ll most likely work their way up,” a market source said.

TPG’s 4.5% notes are a small issuance that do not see much trading action.

However, they dropped 1.5 points outright with the pricing of the add-on. The notes were last seen trading at 102.5 two weeks ago, a market source said.

The add-on was most likely the result of a reverse inquiry, a market source previously said.

“It’s a good solid name,” another source said, and there is not much paper from business development corporations in the market.

J.P. Morgan Securities LLC and Goldman Sachs & Co. were joint bookrunners for the add-on. BofA Merrill Lynch and Morgan Stanley & Co. LLC were the bookrunners when the original notes priced, which priced in January 2017.

Intelsat expands

Intelsat’s new 4.5% convertible notes due 2025 continued to see gains on a dollar-neutral basis on Friday.

The notes, which priced at par on Monday, were trading up to 120 as the Luxembourg-based communications satellite services provider’s stock continued to climb.

The notes have expanded 12 points dollar neutral since issuance, a market source said.

AMAG in focus

AMAG Pharmaceuticals’ 3.25% convertible notes due 2022 were in focus on Friday with the notes seeing gains on an outright and dollar-neutral basis as the company’s stock declined.

The notes were trading in a range of 115 to 116 outright with stock down 3%. The credit spread tightened 75 bps and the notes were expanding 1 to 1.5 points dollar neutral, a market source said.

The movement in the notes came after AMAG announced it would divest Cord Blood Registry to private equity investment firm GI Partners for $530 million in an all-cash sale.

Proceeds will be used to pay off the $475 million outstanding of the company’s 7.875% senior notes due 2023, according to a company news release.

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