Morning Commentary: Convertibles primary market prices $1.2 billion in four deals

By Abigail W. Adams

Portland, Me., March 5 – The convertibles primary market rolled out $1.2 billion in four new deals after the market close on Wednesday.

However, the new paper from BridgeBio Pharma Inc., NanoString Technologies Inc., Enphase Energy Inc. and Infinera Corp. hit the secondary space as equities again slumped on renewed coronavirus concerns.

Despite the overall weakness in equities, BridgeBio’s and NanoString’s convertible notes were making large gains on an outright and dollar-neutral basis.

Enphase Energy’s new convertible notes were also performing well. However, new paper from Infinera sank well below par as the company’s stock continued its downward momentum.

BridgeBio expands

BridgeBio Pharma priced an upsized $475 million of seven-year convertible notes after the market close on Wednesday at par with a coupon of 2.5% and an initial conversion premium of 37.5%.

Pricing came at the midpoint of talk for a coupon of 2.25% to 2.75% and an initial conversion premium of 35% to 40%, according to a market source.

The greenshoe was also upsized to $75 million.

The initial size of the deal was $350 million with a greenshoe of $52.5 million.

While volume was relatively light, the new paper was making large gains on both an outright and dollar-neutral basis.

The 2.5% notes were changing hands at 102.75 with stock off slightly early in the session, a market source said.

There was about $5 million of the bonds on the tape about one hour into the session.

BridgeBio stock was changing hands at $30.50, a decrease of 1.8%, shortly before 11 a.m. ET.

NanoString in demand

NanoString Technologies priced an upsized $200 million of five-year convertible notes after the market close on Wednesday at par with a coupon of 2.625% and an initial conversion premium of 40%.

Pricing came at the midpoint of talk for a coupon of 2.375% to 2.875% and an initial conversion premium of 37.5% to 42.5%, according to a market source.

The greenshoe was also upsized to $30 million.

The initial size of the deal was $175 million with a greenshoe of $26.25 million.

The 2.625% notes were making large gains on an outright and dollar-neutral basis.

The notes were changing hands around 102.75 with stock off early in the session, according to a market source.

The bonds saw about $28 million in reported volume about one hour into the session.

NanoString Technologies stock was changing hands at $34.06, a decrease of 0.26%, shortly before 11 a.m. ET.

Enphase Energy trades up

Enphase Energy priced $320 million of five-year convertible notes after the market close on Wednesday at par at the midpoint of talk with a coupon of 0.25% and an initial conversion premium of 52.5%.

Price talk was for a coupon of 0% to 0.5% and an initial conversion premium 50% to 55%, according to a market source.

The new paper was performing well in active trading.

The 0.25% notes were seen changing hands at 100.75 with stock down early in Thursday’s session.

More than $38 million of the bonds were on the tape.

Enphase Energy stock traded to a low of $51.77 shortly after the opening bell but traded up to $53.58, an increase of 0.21%, shortly before 11 a.m. ET.

Infinera below par

Infinera sold $200 million of seven-year convertible notes after the market close on Wednesday at par with a coupon of 2.5% and an initial conversion premium of 30%.

Pricing came at the cheap end of talk for a coupon of 2% to 2.5% and at the midpoint of talk for an initial conversion premium of 27.5% to 32.5%, according to a market source.

The 2.5% notes sank well below par as stock “got annihilated” early Thursday, a market source said.

The 2.5% notes traded as low as 96.875 early in the session but most prints were between 97 and 98, the source said.

The notes were active with more than $26 million in reported volume early in the session.

Infinera stock traded to a low of $5.45 early in Thursday’s session but was changing hands at $5.62, a decrease of 4.67%, shortly before 11 a.m. ET.

Stock was down more than 22% over the past week, a source said.

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