Collegium convertibles on deck; Omeros surges; ON Semiconductor active post-earnings

By Abigail W. Adams

Portland, Me., Feb. 6 – The convertibles primary market returned to action on Monday with one offering on deck.

Collegium Pharmaceutical Inc. plans to price $175 million of six-year convertible notes after the market close on Tuesday with price talk for a coupon of 2.625% to 3.125% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

Jefferies LLC is bookrunner for the Rule 144A deal which carries a greenshoe of $26.25 million.

The deal is coming as a refinancing with proceeds to be used to repurchase a portion of its 2.625% convertible notes due 2026 in privately negotiated transactions

While only one deal launched on Monday, more are expected before the week draws to a close.

Meanwhile, the secondary space saw a quiet start to the week as equities continued to pull back with markets once again expressing doubt about a dovish pivot from the Federal Reserve.

The Dow Jones industrial average wavered between gains and losses but closed in the red alongside fellow indexes with the Dow down 35 points, or 0.10%, the S&P 500 index down 0.61%, the Nasdaq Composite index down 1% and the Russell 2000 index down 1.4%.

There was $45 million in reported volume about one hour into the session and $369 million in reported volume about one hour before the market close.

Topical and earnings-related news was the driving force of activity in the space.

Omeros Corp.’s 5.25% convertible notes due 2026, a small off-the-run issue that rarely trades in volume, was active on Monday with the notes rocketing outright alongside stock following a milestone payment from the sale of one of its products.

Booking Holdings Inc.’s 0.75% convertible notes due 2025 (A3/A-) continued to dominate the tape with the notes about to be dropped from the Refinitiv convertible indexes.

Expedia Inc.’s 0% convertibles due 2026 (Baa3/BBB-/BBB-) was also a volume mover although with little change in price.

Earnings sparked activity in ON Semiconductor Corp.’s 0% convertible notes due 2027 with the notes moving alongside stock.

Ford Motor Co.’s 0% convertible notes due 2026 fell back below par as stock continued its downward trend after last week’s earnings disappointment.

Milestone

Omeros’ 5.25% convertible notes due 2026 were the major gainers of Monday’s session with the notes skyrocketing as stock catapulted 60% higher after a milestone payment from the sale of a product.

The 5.25% convertible notes jumped 17 points outright.

They were changing hands at 69.375 versus a stock price of $4.39 in the late afternoon.

They yield fell to 19%.

There was $8 million in reported volume.

Omeros’ stock traded to a low of $3.70 and a high of $5.04 before closing the day at $4.98, an increase of 61.17%.

Stock skyrocketed after the company announced it had received a milestone payment of $200 million from Rayner Surgical, to which it sold its ophthalmology product Omidria to in December 2021.

The product reached its milestone event in December 2022, entitling Omeros to the $200 million payment.

The payment plus cash on hand is enough to fund Omeros’ operations through 2025, the company said in a press release.

Volume

Booking’s 0.75% convertible notes due 2025 continued to dominate the tape with the issue soon to be dropped from the Refinitiv indices.

While the 0.75% convertible notes have seen heavy volume over the past two sessions, there was been little movement in price.

The notes remained wrapped around 143 on Monday.

There was $23 million on the tape.

The activity in the issue was an index trade with the notes to be dropped from the Refinitiv convertible indices on Feb. 8, sources said.

Booking’s stock traded to a low of $2,425.91 and a high of $2,474.87 before closing the day at $2,469.95, an increase of 0.61%.

Expedia’s 0% convertibles due 2026 also saw heavy volume with little movement in price.

The 0% notes remained wrapped around 92 with two large $5 million trades on the tape.

Expedia’s stock traded to a low of $116.68 and a high of $120.09 before closing at $119.07, an increase of 0.31%.

ON earnings

ON Semiconductor’s 0% convertible notes due 2027 were active following earnings although the notes were largely unchanged.

The 0% convertible notes were seen at 162.5 versus a stock price of $81.21 in the late afternoon, according to a market source.

There was $10 million in reported volume.

ON’s stock traded to a high of $84.70 and a low of $$77.50 before closing at $80.40, a decrease of 0.61%.

While the semiconductor company’s convertible notes and stock were largely unchanged on Monday, they both saw a large move to the upside heading into the earnings report with the notes rising 12 points outright as stock climbed 12% last week.

ON Semiconductor posted an earnings beat prior to the opening bell with earnings per share of $1.32 versus the $1.26 expected on revenue of $2.1 billion versus the $2.08 billion expected.

The company also announced a $3 billion share repurchase program.

Below par

Ford’s 0% convertible notes due 2026 continued to fall outright alongside stock after last week’s earnings disappointment with the notes closing Monday below par.

The 0% convertible notes were off another 1 point outright with stock down 3% in intraday activity.

The notes were trading at 100.125 versus a stock price of $13.15 early in the session.

They were wrapped around 99.625 heading into the market close.

The notes were unchanged dollar-neutral and were largely moving with the stock, a source said.

There was $8 million in reported volume.

Ford’s stock traded to a low of $12.78 and a high of $13.21 before closing at $13.14, a decrease of 0.68%

While unchanged on Monday, the notes contracted about 0.25 point late last week as stock dropped post-earnings, a source said.

However, the move down was after a massive move to the upside heading into the earnings announcement with the 0% convertible notes trading as high as 105.25.

Mentioned in this article:

Booking Holdings Inc. Nasdaq: BKNG

Expedia Inc. Nasdaq: EXPE

Ford Motor Co. NYSE: F

Omeros Corp. Nasdaq: OMER

ON Semiconductor Corp. Nasdaq: ON

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.