Tesla’s new issue remains in focus; Viavi ticks up; Medicines rebounds from Friday lows

By Stephanie N. Rotondo

Seattle, March 20 – Tesla Inc.’s new $850 million issue of 2.375% convertible notes due 2022 continued to be in vogue on Monday, after pricing late Thursday.

However, a market source deemed the new debt about unchanged at 99.25 bid, 99.75 offered.

Earlier in the session, a market source saw the paper edging up slightly to 99.5.

The company’s 1.25% B convertible notes due 2021 were meantime on the weaker side, slipping about a point to 94 bid, 94.5 offered, according to one sellside source.

At mid-morning, the B convertibles were seen slipping about ˝ point to 94.5.

As for the underlying equity, it was up 42 cents at $261.92.

The new deal came upsized from $750 million and with an initial conversion premium of 25%.

Goldman Sachs & Co., Deutsche Bank Securities Inc., Citigroup Global Markets Inc. and Morgan Stanley & Co. LLC are the lead bookrunners with Barclays Capital, BofA Merrill Lynch and Credit Suisse Securities (USA) LLC also acting as bookrunners.

In connection with the offering, Tesla also sold $347.4 million in common stock, upsized from $250 million. The equity offering includes a $52.2 million greenshoe.

Proceeds from both offerings will be used to strengthen the company’s balance sheet, to further reduce any risks associated with the rapid scaling of the business due to the launch of the Model 3 and for general corporate purposes.

Meanwhile, Viavi Solutions Inc.’s 1% convertible notes due 2024 were seen gaining ground, though without any fresh news to act as a catalyst.

At the bell, a source saw the convertibles in a 104.5 to 105 range, up about 1 to 1.5 points.

Another source pegged the paper at 104.625 at mid-morning, up about a point.

The company’s shares were also better, firming 8 cents to $10.78.

And, Medicines Co.’s convertibles – as well as its stock – was moving back into positive territory, after losing ground in the previous session in sympathy with Amgen.

On Friday, the debt dropped about 10 points, with the equity losing about 10%.

The weakness came as Amgen reported disappointing results about its cholesterol drug, Repatha. But Medicines later released a more positive report about its own cholesterol drug, Inclisiran. That helped to pare Friday’s losses.

Medicines moves up

Medicines’ convertible bonds were pushing back up on Monday following massive losses on Friday.

The 2.5% convertible notes due 2022 traded in a wide rage, according to one market watcher. The source saw the paper trade as low as 158.75 and as high as 165.5.

In either case, that was better than the levels seen on Friday, the source remarked.

As for the 2.75% convertible notes due 2023, they were pegged with a 124 handle, which compared to levels around 114 on Friday.

At another desk, the 2.75% convertibles were seen at 123, up from 118 in the previous session.

The company’s stock was also recovering from Friday’s lows, trading up $2.92, or 6.04%, to $51.30.

On Friday, rival Amgen said that its Repatha drug cut the risk of heart attack, stroke and cardiovascular death by 20%, based on its latest study results.

But the market was disappointed with the results, as expectations were for a 24% reduction.

Amgen made the announcement at the American College of Cardiology annual meeting in Miami.

Medicines gave its own presentation at the meeting on Friday, announcing that Phase 2 results of its cholesterol drug, Inclisiran, indicated that the product was safe and well tolerated.

As such, the drug is moving on to a Phase 3 study.

Medicines is producing the drug in partnership with Alnylam.

Mentioned in this article:

Medicines Co. Nasdaq: MDCO

Tesla Inc. Nasdaq: TSLA

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