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Morning Commentary: OPKO Health’s new convertible notes hit the market, trade at par
By Abigail W. Adams
Portland, Me., Feb. 5 – The convertibles secondary market opened Tuesday with new paper in the space.
OPKO Health, Inc. priced $200 million of six-year convertible notes prior to the market open on Tuesday at par with a coupon of 4.5% and an initial conversion premium of 20%.
Pricing came in line with talk for a coupon of 4.5% and an initial conversion premium of 20%.
The overnight deal was largely a bought deal, sources said.
The new notes dominated activity in the secondary space with $22 million on the tape about one hour into the trading session and estimated volume at about $50 million, a market source said.
The notes were largely wrapped around par in the high-volume activity. They were seen at 100 bid, 101 offered. The majority of trades were outright with only a few on swap, a source said.
OPKO stock was taking a hit after the convertible notes offering was announced with stock down in after-hours trading and early in the session.
Stock was $2.86, a decrease of 18.61%, shortly before 11 a.m. ET.
Using an 85% delta, the notes were expanded as much as 13 points dollar-neutral.
However, while the notes saw a large dollar-neutral expanded based off of Monday’s closing price, the decrease in stock was already priced into the notes, another source said.
While focus was on OPKO’s new convertible notes offering, Tesla Inc.’s 1.25% convertible notes due 2021 saw a smattering of trades early in the session.
The notes traded up to 110.25 and were expanded slightly on a dollar-neutral basis as stock continued to tick upward.
Tesla stock was $318.48, an increase of 1.79%, shortly before 11 a.m. ET.
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