Morning Commentary: Omnicell, SolarEdge convertibles trade up on debut; Zogenix eyed

By Abigail W. Adams

Portland, Me., Sept. 23 – New convertibles supply was in focus on Wednesday with two new deals hitting the aftermarket and one more offering on deck.

SolarEdge Technologies Inc. priced an upsized $550 million of five-year convertible notes and Omnicell Inc. priced $500 million of five-year convertible notes after the market close on Tuesday.

Both deals skyrocketed on an outright and dollar-neutral basis in the aftermarket.

While the new paper was in focus in the secondary space, market players were also eyeing the new deal on deck.

Zogenix Inc. plans to price $200 million of seven-year convertible notes after the market close on Wednesday.

While the deal looked optically attractive, the longer dated maturity was a drawback, sources said.

SolarEdge skyrockets

SolarEdge priced an upsized $550 million of five-year convertible notes after the market close on Tuesday at par with a coupon of 0% and an initial conversion premium of 50%.

Pricing came at the rich end of price talk for a coupon of 0% to 0.5% and richer than talk for an initial conversion premium of 42.5% to 47.5%, according to a market source.

The new paper skyrocketed on an outright and dollar-neutral basis.

It traded up to 104.5 out of the gate and expanded 2.75 points dollar-neutral, a source said.

SolarEdge stock was changing hands at $195.99, an increase of 5.83%, shortly before 11 a.m. ET.

Omnicell trades up

Omnicell priced $500 million of five-year convertible notes after the market close on Tuesday at par with a coupon of 0.25% and an initial conversion premium of 37.5%.

Pricing came at the rich end of talk for a coupon of 0.25% to 0.75% and richer than talk for an initial conversion premium of 30% to 35%, according to a market source.

The new paper was also performing well on an outright and dollar-neutral basis.

The notes traded up to 102.25 out of the gate and expanded 1.5 points dollar-neutral, a source said.

Omnicell stock was changing hands at $71.84, an increase of 1.49%, shortly before 11 a.m. ET.

Zogenix eyed

Zogenix plans to price $200 million of seven-year convertible notes after the market close on Wednesday with price talk for a coupon of 2.25% to 2.75% and an initial conversion premium of 30% to 35%.

The deal was heard to be in the market with assumptions of 800 basis points over Libor and a 40% vol., which looked 1.72 points cheap at the midpoint of talk, a source said.

The notes offered “a generous yield by contemporary standards,” a source said.

However, the seven-year maturity was seen as a drawback by other sources.

The offering was a wall-crossed deal from a small cap company.

“I don’t think it has a wide audience or will be a screamer,” a source said.

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