Convertibles secondary ends quarter on firm footing; Rexford adds outright; OPKO rises

By Abigail W. Adams

Portland, Me., March 28 – The convertibles secondary space closed the holiday-truncated week quietly yet firmly on Thursday with buyers active in the space.

Equity indexes were either side of unchanged on Thursday but closed the quarter near all-time highs with credit spreads also near their tights of the year.

With market conditions strong, sources expect a smattering of activity from the primary market in the weeks ahead although earnings season blackouts are expected to dampen the pace of issuance.

The Dow Jones industrial average closed Thursday up 47 points, or 0.12%, the S&P 500 index closed up 0.11%, the Nasdaq Composite index closed down 0.12% and the Russell 2000 index closed up 0.48%.

There was $72 million in reported volume about one hour into the session and $500 million about one hour before the market close.

Rexford Industrial Realty, LP’s two tranches of exchangeable notes (Baa2/BBB+/BBB+) remained active their second day in the secondary space with the notes adding outright.

Activity surrounding Cardlytics Inc.’s new 4.25% convertible notes due 2029 tempered on Thursday although the notes continued their strong upward momentum.

OPKO Health Inc.’s 3.75% convertible notes due 2029, the first new deal of 2024, shot back above par for the first time since late January as stock popped on the heals of an asset sale.

While volume in the name was light, Exact Sciences Corp.’s convertible notes notched strong gains on the week amid a run-up of the company’s stock.

Day 2

Rexford’s two tranches of exchangeable notes remained active their second day in the secondary space with the notes continuing to notch outright gains.

While unchanged early in the session, the notes added about 0.5 point outright with stock up 1%.

The 4.375% exchangeable notes due 2027 were trading at 101.5 early in the session and 102 in the late afternoon, according to a market source.

There was $41 million in reported volume.

The 4.125% exchangeable notes due 2029 were trading at 101.375 early in the session and were just shy of 102 in the late afternoon.

There was $25 million in reported volume.

Rexford’s stock traded to a low of $50 and a high of $50.67 before closing at $50.30, up 0.84%.

The notes have put in a solid performance since hitting the secondary space on Wednesday with the notes up outright and expanded about 0.5 point dollar-neutral.

Cardlytics’ new 4.25% convertible notes due 2029 were quiet on Thursday with trading of the small issue subsiding.

However, the notes continued to add to the strong gains made on their aftermarket debut on Wednesday.

The 4.25% convertible notes added 4 points outright with stock up as much as 7% in intraday activity.

They were trading at 112.375 in the late afternoon, according to a market source.

There was $6 million in reported volume.

Cardlytics’ stock traded to a low of $13.80 and a high of $15.79 before closing at $14.49, off 1.02%.

Cardlytics’ 4.25% convertible notes were the outperformers of the week with the notes soaring to a 108 handle and expanding 3 to 4 points dollar-neutral on their aftermarket debut.

OPKO above par

OPKO Health’s 3.75% convertible notes due 2029 returned to focus on Thursday with the notes shooting above par as stock popped on the heels of an asset sale.

The 3.75% convertible notes jumped 9 points outright with stock up 12%.

They were trading at 104.5 versus a stock price of $1.17 in the late afternoon, according to a market source.

OPKO’s stock traded to a low of $1.12 and a high of $1.25 before closing at $1.21, an increase of 12.99%.

OPKO’s stock popped on Thursday after the company announced it had sold its diagnostics business to LabCorp for $237.5 million.

While the notes posted strong outright gains on Thursday, they have struggled on hedge with the borrow on the stock becoming increasingly more difficult, a source said.

OPKO priced the $200 million issue at par on Jan. 4.

Exact Sciences’ run

While volume in the tranches was light, Exact Sciences’ convertible notes made strong gains on the week with stock on a strong run.

Exact Sciences’ 0.375% convertible notes due 2028 were up 6 to 7 points outright on the week as stock added more than 11%.

The 0.375% notes traded just shy of 93 on Thursday.

There was $7 million in reported volume.

The notes were up 3 points dollar-neutral on the week, a source said.

The 2% convertible notes due 2030 were up about 8 points outright on the week to trade as high as 114.5 on Thursday.

There was $8 million in reported volume.

They expanded about 0.5 point on the week.

Exact Sciences’ stock traded to a low of $67.18 and a high of $71.62 before closing at $69.06, up 3.26%.

Stock has added about 11% over the past week.

While there was no clear catalyst for the momentum in the name, it might be related to optimism about a new diagnostic test the company is developing.

Mentioned in this article:

Cardlytics Inc. Nasdaq: CDLX

Exact Sciences Corp. Nasdaq: EXAS

OPKO Health Inc. Nasdaq: OPK

Rexford Industrial Realty Inc. NYSE: REXR

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