NuVasive convertibles in focus on buyout talk; Euronet active; SolarCity notes improve

By Abigail W. Adams

Portland, Me., Feb. 11 – While the convertibles secondary space was hopping early in Monday’s session with more than $163 million on the tape, about $80 million of that volume appeared to be from a single portfolio selling its holdings, a market source said.

Not including that activity, the secondary space was largely tame on Monday with $300 million on the tape by the mid-afternoon.

NuVasive Inc.’s 2.25% convertible notes due 2021 were in focus with the notes making gains on an outright basis but contracting dollar-neutral as stock skyrocketed on news about a potential buyout.

Euronet Worldwide Inc.’s 1.5% convertible notes due 2044 also saw high-volume activity as stock continued its upward momentum following a recently released fourth-quarter earnings report.

SolarCity Corp.’s 1.625% convertible notes due Nov. 1, 2019 were again active and continued to improve on Monday as the maturity of the notes approaches.

Tabula Rasa Healthcare Inc.’s new 1.75% convertible notes due 2026 were quiet on Monday after dominating activity on their market debut.

However, the notes were holding onto their initial expansion.

NuVasive contracts

NuVasive’s 2.25% convertible notes due 2021 were in focus in the secondary space on Monday on news of a potential buyout of the company.

While the 2.25% convertible notes were making gains on an outright basis, they contracted dollar-neutral as stock soared in response to the news.

The notes traded as high as 111 during Monday’s session but stood poised to close the day around 109.75.

They were contracted as much as 2 points dollar-neutral in intraday trading but pared their losses down to a 1.5 point dollar-neutral contraction by the mid-afternoon, according to a market source.

More than $24 million of the bonds were on the tape during Monday’s session.

NuVasive stock traded as high as $58.19 but closed the day at $56.12, an increase of 13.26%.

Stock was soaring on news Smith & Nephew plc was in talks to buy the medical device company in a deal that could be valued at $3 billion, the Financial Times reported.

The 2.25% notes were trading on a 45% delta, but the delta on the notes was now more like 40%, a source said.

Assuming a takeout price of $68 to $70 on stock, a lighter delta would be needed to break even, a market source said.

Some expressed skepticism over whether the deal would actually materialize.

However, the stock price seemed to indicate the market believed it to be a distinct possibility, a source said.

Euronet active

Euronet Worldwide’s 1.5% convertible notes due 2044 were also major volume movers on Monday as stock continued its upward momentum following the company’s recently reported fourth-quarter earnings report.

The 1.5% convertible notes jumped 7 points outright to 182.5 early in the session but came in alongside stock to close the day around 178.75.

The notes traded largely at parity and were following the stock move, a market source said.

More than $16 million of the bonds changed hands during Monday’s session.

Euronet stock traded as high as $134.00 during Monday’s session but came in to close the day at $129.13, an increase of 2.02%.

Stock jumped 12% on Friday following the electronic payment services provider’s fourth-quarter results.

Euronet reported earnings per share of $1.37, which beat analyst expectations for earnings per share of $1.27.

While revenue of $649.4 million missed analyst expectations of revenue of $664 million, the miss was attributed to accounting changes, Investor’s Business Daily reported.

SolarCity improves

SolarCity’s 1.625% convertible notes due Nov. 1, 2019 continued to see renewed attention in the secondary space with the level of the notes improving.

The 1.625% convertible notes were changing hands between 96.5 and 96.75 during Monday’s session.

The notes were trading around 94.5 about one week ago, a source said.

While the notes are not guaranteed by Tesla Inc., there is increasing confidence the notes will be covered upon their maturity, a market source said.

CEO Elon Musk personally owns too many of the bonds “to let them go belly up,” the source said.

The notes have been active in the past few trading sessions.

Tabula Rasa holds

Tabula Rasa’s 1.75% convertible notes due 2026 saw scant trading activity on Monday.

However, the notes were holding onto their initial expansion in the secondary space.

The 1.75% convertible notes were changing hands around 102.625 on Monday. Stock closed the day at $53.96, an increase of 2.18%.

The notes maintained their 2 point dollar-neutral expansion, a market source said.

Tabula Rasa’s 1.75% convertible notes hit the secondary space on Friday and traded up on both an outright and dollar-neutral basis.

The notes were trading between 101.5 and 102 on their debut and were expanded 2 points dollar-neutral, sources said.

Mentioned in this article:

Euronet Worldwide Inc. Nasdaq: EEFT

NuVasive Inc. Nasdaq: NUVA

Tabula Rasa Healthcare Inc. Nasdaq: TRHC

Tesla Inc. Nasdaq: TSLA

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