Morning Commentary: Guardant Health convertible offering eyed; Liberty Media active

By Abigail W. Adams

Portland, Me., Nov. 16 – The convertibles primary market leapt into action on Monday with one megadeal on deck.

Guardant Health Inc. plans to price $1 billion of seven-year convertible notes after the market close on Monday with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 27.5% to 32.5%.

The deal was marketed with assumptions of 450 basis points over Libor and a 40% vol., according to a market source.

Using those assumptions, the deal looked 0.54 point cheap at the midpoint of talk.

With the Nov. 16 week the last full week before the Thanksgiving holiday, some sources were expecting to see a flurry of primary market activity as the deals in the pipeline rushed to get done.

However, others didn’t expect to see too much of a calendar in the coming days.

Meanwhile, in a deja vu from last week, equity benchmarks saw a strong open following positive early data from Moderna’s Covid-19 vaccine clinical trial.

The Dow Jones industrial average and S&P 500 were poised to set fresh records on Monday on optimism surrounding the reopening of the economy.

The secondary space was active with more than $100 million in reported volume about one hour into the session.

However, few names saw concentrated trading activity, a source said.

Liberty Media Corp.’s 0.5% notes due 2050 exchangeable for Live Nation Entertainment Inc.’s common stock again topped the volume charts as Live Nation’s stock again rallied on the vaccine news.

The 0.5% exchangeable notes traded as high as 103.25 before settling down to 102.625.

The notes were largely moving in line on a dollar-neutral, or hedged, basis, a source said.

There was more than $9 million in reported volume.

Live Nation’s stock was changing hands at $67.79, an increase of 2.59%, shortly before 11 a.m. ET.

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