Morning Commentary: OPKO Health convertible offering eyed; refinancing wave begins

By Abigail W. Adams

Portland, Me., Jan. 4 – The convertibles primary market reactivated in the first few trading sessions of 2024 with one new offering on deck.

OPKO Health Inc. plans to price $200 million of five-year convertible notes after the market close on Thursday with price talk for a coupon of 3.25% to 3.75% and an initial conversion premium of 25% to 30%.

The deal was heard to be in the market with assumptions of 800 basis points over SOFR and a 40% vol.

Using those assumptions, the deal looked about 3 points cheap at the midpoint of talk.

The first deal to hit the market in 2024 was coming as a refinancing with proceeds to be used to repurchase a portion of the 4.5% convertible notes due 2025 in privately negotiated transactions.

The small deal was mostly limited to the holders of the outstanding notes being refinanced and was a continuation of the exchange-type transactions that have fueled new deal activity over the past year, sources said.

The trend is expected to continue in 2024 with refinancings driving a faster pace of issuance.

Distressed debt exchanges are expected to be plentiful in the coming year as the pandemic darlings that issued convertible notes in 2020 and 2021 address their looming maturities.

fuboTV launched the first deal of 2024 with its privately negotiated exchange of $205,835,000 in principal of its 3.25% convertible senior notes due 2026 with holder Mudrick Capital Management, LP, which was announced Tuesday.

The 3.25% convertible notes due 2026 were exchanged for $177,506,000 in principal of new convertible notes due 2029 that will carry a 7.5% cash interest payment or a 10% payment in kind, Prospect News reported.

fuboTV issued $402.5 million of the 3.25% convertible notes in January 2021.

The notes were wrapped around 70 with a yield of about 21% in mid-December.

© 2015 Prospect News.
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