Morning Commentary: Convertibles primary quiet; LG Chem notes set to trade; BridgeBio up

By Cristal Cody

Tupelo, Miss., July 18 – Primary action in the convertible bond market stayed muted early Tuesday.

Issuance last week and so far this week has been “absolutely zero because all the issuers are still in earnings corporate blackout,” a source reported.

LG Chem Ltd. moved Tuesday to list its new $2 billion two-tranche offering of notes (A3) exchangeable for LG Energy Solution Ltd. shares that priced earlier in the month.

The notes, sold July 11 and issued on Tuesday, includes $1 billion of 1.25% exchangeable bonds due 2028 that will be listed in the bond market starting Wednesday with the short name of “LG Chem b1.25%280718S.”

The tranche of five-year exchangeable notes priced at par to yield 1.25% with an initial exchange premium of 25%.

Price talk was for a coupon of 0.75% to 1.25% and an initial exchange premium of 25% to 35%.

LG Chem’s $1 billion of 1.6% exchangeable bonds due 2030 also will start trading on Wednesday with the short name of “LG Chem b1.6%300718S.”

The seven-year exchangeable notes priced at par to yield 1.85% with an initial exchange premium of 30%.

Price talk was for a coupon of 1.35% to 1.85% and an initial exchange premium of 25% to 35%.

The notes are exchangeable at a fixed rate of US$1 to KRW 1,295.

The bonds will be traded in a minimum board lot size of $200,000.

LG Chem is a Seoul, South Korea-based chemical company, and subsidiary LG Energy is a battery company.

BridgeBio Pharma jumps

Stocks were mixed over the morning with the S&P 500 index and Dow Jones industrial average up 0.31% and 1.01%, respectively, while the Nasdaq dipped 0.06% as earnings reports took focus.

Bank of America Corp. dominated financial news after reporting strong earnings in the second quarter.

In the secondary market, BridgeBio Pharma, Inc. (Nasdaq: BBIO) continued to rally over the morning after opening the week at nearly double Friday’s closing price, a source said Tuesday.

“Yesterday, you had a large rally in BridgeBio Pharma,” the market source said. “That stock went from $18.22 closed on Friday to trading at $36, so it’s about doubled. Those were very active yesterday and that’s where it’s sitting right now.”

BridgeBio Pharma’s shares closed Monday at $32.04 and traded early Tuesday in the $32.02 to $36.36 range.

The stock traded with a 13 handle back in May.

BridgeBio Pharma’s 2.25% convertible notes due 2029 were trading about ¾ point better early in the session on a 78 handle and a yield at 6.9%.

The bonds saw heavy secondary action on Monday and shot up about 12 points from Friday’s closing at 63.5 and a 11.29% yield.

The Palo Alto, Calif.-based biopharmaceutical company on Monday announced positive data from a clinical drug trial and held a conference call and live webcast.

On Tuesday, BridgeBio Pharma also reported that its board compensation committee granted eight new employees restricted stock units.

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