Ormat convertible notes on tap; Illumina active; Global Blood jumps; Lucid recovers

By Abigail W. Adams

Portland, Me., June 21 – The convertibles primary market reared its head on Tuesday and launched a new deal as the market tone improved for risk assets.

Ormat Technologies Inc. plans to price $350 million of five-year green 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%, according to a market source.

Barclays and J.P. Morgan Securities LLC are bookrunners for the Rule 144A and Regulation S offering, which carries a greenshoe of $52.5 million.

It was a quiet return from the long holiday weekend in the convertibles secondary space with volume light despite a strong day for equity markets.

Equity indexes surged to start the week following last week’s brutal sell-off which dragged the S&P 500 index into bear territory.

The Dow Jones industrial average closed Tuesday up 641 points, or 2.15%, the S&P 500 index closed up 2.45%, the Nasdaq Composite index closed up 2.51% and the Russell 2000 index closed up 1.7%.

While equities rallied on Tuesday, sources questioned whether it was just another bear market bounce with little change on the macro horizon to justify the strength in equities.

Many now see recession as the inevitable outcome of the Federal Reserve’s rate hike schedule, sources said.

The rally in equities did little to jolt trading activity in the secondary space with $50 million on the tape about one hour into the session and $374 million in reported volume about one hour before the market close.

However, the names that did trade improved.

Illumina Inc.’s 0% convertible notes due Aug. 18, 2023 (BBB) were on the rise in heavy volume with the short-duration notes offering an attractive yield.

Global Blood Therapeutics Inc.’s 1.875% convertible notes due 2028 skyrocketed outright after a series of positive headlines for the company.

Lucid Group Inc.’s 1.25% convertible notes due 2026 were on the rebound after getting decimated the previous week.

Illumina active

Illumina’s 0% convertible notes due Aug. 18, 2023 were improved in heavy volume.

The notes saw several large prints between 95 and 95.25 during Tuesday’s session, according to a market source.

The notes were now offering a yield of about 4.7%.

With $13 million in reported volume, the notes were the most actively traded in the secondary space.

The 0% notes are not equity sensitive.

However, Illumina’s stock was in the red on Tuesday, closing the day at $183.24, a decrease of 2.16%.

The 0% notes have traded rich for the majority of their time in the secondary space.

However, with the notes dropping below par in May, they were beginning to look attractive as a yield play, sources said.

The yield on the one-year Treasury Bill settled at 2.912% on Tuesday.

Global Blood jumps

Global Blood’s 1.875% convertible notes due 2028 skyrocketed on an outright basis on Tuesday with a series of positive headlines lifting the company’s stock.

The 1.875% notes jumped more than 15 points outright with stock up more than 7%.

The notes were changing hands at 106.625 versus a stock price of $27.30 early in the session.

They continued to climb as the session progressed and were trading at 111.75 versus a stock price of $28.83 in the late afternoon.

The small illiquid issue was one of the most actively traded during Tuesday’s session with $12 million in reported volume.

Global Blood’s stock traded to a low of $26.79 and a high of $29.39 before closing the day at $28.58, an increase of 7.28%.

The biopharmaceutical company focused on sickle cell disease has seen its stock surge 25% over the past five sessions with several tailwinds propelling the stock higher.

In early June, the Food and Drug Administration granted two of Global Blood’s treatments orphan drug and rare pediatric disease designation.

The Sickle Cell Care Expansion Act was also introduced to the Senate late last week, which would increase federal funding for the treatment of sickle cell.

Lucid gains

Lucid’s 1.25% convertible notes due 2026 were on the rise on Tuesday after tanking the previous week.

The 1.25% notes jumped almost 3 points outright in active trading.

They were changing hands at 60.75 in the late afternoon with a yield of 13.117%, according to a market source.

Lucid’s stock traded to a low of $17.15 and a high of $18.68 before closing the day at $17.90, an increase of 7.64%.

Lucid’s 1.25% convertible notes tanked last week as investors questioned the electric vehicle start-up’s ability to survive.

The notes traded down to a 56-handle, their lowest level since hitting the aftermarket, and contracted several points dollar-neutral, sources said.

In addition to general carnage for small cap stocks, particularly those that went public through SPAC mergers, Lucid’s capital structure was hard hit by news that it had secured a new $1 billion secured asset-based revolving credit facility.

Mentioned in this article:

Global Blood Therapeutics Inc. Nasdaq: GBT

Illumina Inc. Nasdaq: ILMN

Lucid Group Inc. Nasdaq: LCID

Ormat Technologies Inc. NYSE: ORA

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