Morning Commentary: Retrophin, Perficient hit the market; Infinera offering looks cheap

By Abigail W. Adams

Portland, Me., Sept. 6 – New convertibles were in focus on Thursday with $365 million in new paper hitting the secondary space and an additional $275 million set to price after the market close.

Retrophin, Inc. priced an upsized $240 million of seven-year convertible notes and Perficient Inc. priced $125 million of five-year convertible notes after the market close on Wednesday.

While Retrophin traded up out of the gate, Perficient was seen trading below par.

Infinera Corp. plans to price $275 million of six-year convertible notes after the market close on Thursday. The deal looks several points cheap, sources said.

Retrophin trades up

Retrophin priced an upsized $240 million of seven-year convertible notes after the market close on Wednesday with a coupon of 2.5% and an initial conversion premium of 35%.

The deal came at the midpoint of price talk for a coupon of 2.25% to 2.75% and an initial conversion premium of 32.5% to 37.5%.

The initial size of the deal was $200 million. The greenshoe was also upsized to $36 million from $30 million.

The new notes traded up right out of the gate, a market source said. They were seen at 102 bid pre-open and continued to rise in active trading.

The notes traded as high as 105 on an outright basis with most prints between 103 and 104.

More than $24 million of the bonds were on the tape less than two hours after the opening bell. Retrophin stock was up more than 5% early in the session after a 10% drop on Wednesday.

Retrophin’s 4.5% convertible notes due 2019 also saw some action early in the session. The notes were seen changing hands at 171.75. Parity for the notes is 169.5, a market source said.

Proceeds from the new offering will be used to repurchase a portion of the biopharmaceutical company’s 4.5% convertible notes due 2019, which have $46 million outstanding.

Perficient below par

Perficient priced $125 million of five-year convertible notes after the market close on Wednesday at the cheap end of talk with a coupon of 2.375% and an initial conversion premium of 25%.

Price talk had been for a coupon of 1.875% to 2.375% and an initial conversion premium of 25% to 30%, according to a market source.

The bonds were below par in active trading early in the session. They were seen trading between 98.75 and par with more than $26 million on the tape, a market source said. Perficient stock was down 3% in early trading to $29.16.

Infinera looks cheap

Infinera plans to price $275 million of six-year convertible notes after the market close on Thursday with price talk for a coupon of 1.875% to 2.375% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

Underwriters are marketing the deal with a credit spread of 450 basis points over Libor and a 40% vol., according to a market source. Sources pegged the deal between 4 and 7 points cheap.

“It’s pretty cheap,” a market source said. “I suspect it will do pretty well.”

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