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Morning Commentary: New Teva lags; Inphi trades better; Pandora, Vitamin Shoppe deals look cheap
By Rebecca Melvin
New York, Dec. 3 – Teva Pharmaceutical Industries Ltd.’s newly priced 7% mandatory convertibles contracted on a swap basis in the early going on Thursday after the Petach Tikva, Israel-based pharmaceutical company priced $3.375 billion of the preferred shares at the midpoint of talk, market sources said.
The new Teva 7% mandatories were quoted at 100.125 bid, 100.375 offered by a New York-based trader.
Versus an underlying share price of $64.00, the convertibles looked to have contracted by more than a point. Teva’s underlying shares were last up 2.3% at $64.54.
Also in the primary market, Inphi Corp.’s newly priced 1.125% convertibles opened around 100.25 bid, 100.5 offered after the Santa Clara, Calif.-based semiconductor company priced an upsized $200 million of the five-year bonds at the midpoint or near the midpoint of talk.
That Inphi deal looked to be better on swap versus its underlying shares, which were last down 72 cents, or 2.4% at $29.03.
The primary has heated up this past week, and two other new issues launched late Wednesday. Pandora Media Inc.’s $300 million of five-year convertible senior notes looked to be about 4.5 points cheap at the midpoint of talk using a credit spread of 500 basis points over Libor and 35% vol., a Connecticut-based trader said.
The Pandora bonds were talked at a 1.75% to 2.25% coupon and a 25% to 30% premium.
The Vitamin Shoppe $125 million offering of five-year convertible senior notes looked to be worth 101.25 at the midpoint of talk, using a credit spread of 500 bps over Libor and 32% vol., the trader said.
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