Omnicell, SolarEdge convertibles trade up on debut; Zogenix eyed; Illumina active

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. sold $500 million of five-year convertible notes after the market close on Tuesday.

Both deals were making gains 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.

However, the deal was heard to be wall-crossed.

Meanwhile, outside of the new paper, trading activity was light in the secondary space with equity markets volatile.

There was about $400 million in reported volume one hour before the market close as equities sold off amid renewed concerns about the economic recovery, according to a market source.

Illumina Inc.’s convertible notes continued to see heavy volume as stock pared its losses from a multi-session slide.

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 pricing of the notes was “head scratching,” a market source said.

However, the demand seen during bookbuilding followed the notes into the secondary where the new paper skyrocketed on an outright and dollar-neutral basis.

The notes traded up to 104.5 and expanded 2.75 points dollar-neutral early in the session, a source said.

They continued to trade around 104 throughout the session and were seen expanded 3 points dollar-neutral in the late afternoon, a source said.

SolarEdge stock traded to a high of $196.51 and a low of $187.9 before closing the day at $189.44, an increase of 2.29%.

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.

However, the notes came in as stock tumbled into the afternoon.

The 0.25% notes were changing hands at 101.25 heading into the market close.

They were expanded about 2 points dollar-neutral, a source said.

Omnicell stock traded to a low of $70.15 and a high of $72.13 before closing the day at $70.16, a decrease of 0.88%.

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.

The biopharmaceutical company’s stock tanked on the heels on the convertible notes offering.

Zogenix stock closed Wednesday at $18.68, a decrease of 17.27%.

Illumina active

Illumina’s convertible notes continued to dominate the tape as the gene-sequencing company’s stock pared its losses from a multi-session slide.

Illumina’s 0% convertible notes due 2023 were changing hands at 104 in the late afternoon.

They were largely unchanged dollar-neutral, a source said.

The bonds saw almost $20 million in reported volume by the late afternoon.

The 0.5% convertible notes due 2021 traded up to 120.25 with about $10 million in reported volume.

Illumina stock traded to a high of $278.16 and a low of $271.14 before closing the day at $273.00, an increase of 1.67%.

Stock had been on a downward spiral since news broke about the company’s intention to acquire cancer diagnostic company Grail Inc. for $7.1 billion.

Grail was formed when Illumina spun the company off in 2016.

Stock dropped 20% last week alone.

Mentioned in this article:

Illumina Inc. Nasdaq: ILMN

Omnicell Inc. Nasdaq: OMCL

SolarEdge Technologies Inc. Nasdaq: SEDG

Zogenix Inc. Nasdaq: ZGNX

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