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Morning Commentary: Omeros prices; Finisar, II-VI convertibles in focus on merger
By Abigail W. Adams
Portland, Me., Nov. 9 – The convertibles primary market broke its silence on Friday and priced a new deal, ending a two-week drought of new deal activity.
Omeros Corp. priced $210 million of five-year convertible notes prior to the market open on Friday at par with a coupon of 6.25% and an initial conversion premium of 20%.
Pricing came in line with talk for a fixed coupon of 6.25% and at the cheap end of talk for a premium of 20% to 25%, according to a market source.
The deal was a “tightly held wall crossed deal,” a market source said. The new paper was not seen trading early in Friday’s session.
While the earnings season blackout, market volatility, midterm elections and the Federal Reserve meeting stifled new deal activity over the past few weeks, there are several deals in the pipeline with the Nov. 12 week expected to be an active one, sources said.
Meanwhile, Finisar Corp. and II-VI Inc.’s convertible notes were in focus in the secondary space after II-VI announced it would acquire Finisar in a $3.2 billion cash and stock deal.
“That’s the excitement today,” a market source said.
Finisar’s 0.5% convertible notes due 2036 jumped 7 points outright to 96 as stock soared on the news.
The optical communications product manufacturer’s 0.5% convertible notes due 2033 were less active and largely trading sideways at 99.75.
Finisar stock popped more than 17% early in Friday’s session.
II-VI’s 0.25% convertible notes due 2022 dropped alongside stock after the announcement. The notes traded down 11 points outright to 106.
The laser and optical components maker’s stock sank more than 15% on the news.
The $3.2 billion cash and stock transaction is expected to close in the middle of 2019 and is subject to shareholder and regulatory approvals.
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