Western Digital convertibles active; CNX notes pare losses; Turning Point, Vocera gain

By Abigail W. Adams

Portland, Me., July 28 – The convertibles primary market saw another quiet session on Tuesday with no new deals launching.

However, sources remain hopeful that there will be new paper before the week is through.

While the domestic primary market remained quiet, the European primary market was active with STMicroelectronics NV’s $1.5 billion two-tranche offering.

The Regulation S deal will not trade in the domestic market. However, proceeds will be used to call the company’s 0% convertible notes due 2022.

Meanwhile, the secondary space remained firm on Tuesday even with equities closing the day in the red due to mixed earnings reports.

Western Digital Corp.’s 1.5% convertible notes due 2024 saw high-volume activity on Tuesday although the notes saw little movement in price.

CNX Resources Corp.’s 2.25% convertible notes due 2026 pared their losses from the previous session.

While volume in the small, illiquid issues was light, Turning Point Brands Inc.’s 2.5% convertible notes due 2024 and Vocera Communications Inc.’s 1.5% convertible notes due 2023 were both posting gains following earnings.

STM’s Regulation S deal

STMicroelectronics priced $1.5 billion 0% convertible bonds in five- and seven-year tranches in a Regulation S deal on Tuesday.

The deal included a $750 million tranche of five-year notes, which priced at the midpoint of talk with an offer price of 105.8 to yield negative 1.12% and an initial conversion premium of 47.5%.

Price talk for the five-year tranche was for an offer price of 104.5 to 107.1 to yield negative 1.36% to negative 0.88% and an initial conversion premium of 45% to 50%, according to a market source.

The deal also included a $750 million tranche of seven-year notes, which priced at the midpoint of talk with an offer price of 104.5 to yield negative 0.63% and an initial conversion premium of 52.5%.

Price talk for the seven-year tranche was for an offer price of 102.7 to 106.3 to yield negative 0.87% to 0.38% and an initial conversion premium of 50% to 55%.

While the new paper will not trade domestically, proceeds will be used to take out the company’s 0% convertible bonds due 2022, which have $750 million outstanding.

Western Digital active

Western Digital’s 1.5% convertible notes due 2024 were among the major volume movers of Tuesday’s session.

However, while the notes were active, they were little changed.

The 1.5% convertible notes saw several large prints around 97.

There was more than $15 million in reported volume heading into the late afternoon.

Sources queried were unclear what was driving the volume in the notes.

There was not a significant movement in stock on Tuesday.

The hard disk drive manufacturer and data storage company’s stock traded to a high of $43.83 and a low of $42.77 before closing the day at $42.85, a decrease of 2.01%.

While Western Digital has not yet announced its earnings report date, the earnings results of several tech companies will be announced this week.

Industry peer and former convertible issuer Intel Corp.’s stock plunged after the company reported its second-quarter earnings late last week.

While the company beat expectations in the second quarter, stock dropped 18% last Friday on weak third-quarter guidance, Business Insider reported.

CNX pares losses

CNX Resources’ 2.25% convertible notes due 2026 pared their losses from the previous session on Tuesday.

The 2.25% notes were up 2.5 points outright to 97.5, according to a market source.

CNX stock also recouped its losses from the previous session. Stock traded to a high of $9.67 and a low of $8.66 before closing the day at $9.22, an increase of 5.01%.

The notes were changing hands on a 97-handle last week.

However, they dropped to the 94.5 to 95 range in active trading on Monday with stock off more than 8%.

CNX stock was selling off on Monday following news the natural gas company would acquire the remaining shares of CNX Midstream in an all-stock transaction valued at $357 million.

Making gains

While the issues were small and illiquid, Turning Point’s 2.5% convertible notes due 2024 and Vocera’s 1.5% convertible notes due 2023 both made large gains as their stock popped following earnings.

Turning Point’s 2.5% convertible notes due 2024 traded up to 92.5 on Tuesday.

The notes gained more than 10 points outright with their previous level around 83, a market source said.

The notes move on a light delta of about 35%, a source said.

Turning Point stock traded to a high of $34.32 and a low of $31.10 before closing the day at $33.24, an increase of 9.41%.

The maker of tobacco and cannabis auxiliary products, such as rolling paper, reported second-quarter earnings per share of 71 cents, which beat analyst expectations for earnings per share of 45 cents.

Revenue was $104 million, which beat analyst expectations for earnings of $95 million.

Vocera Communications’ 1.5% convertible notes were not active on Tuesday.

However, the notes gained 1.5 points dollar-neutral as stock skyrocketed following a second-quarter earnings beat.

Vocera stock traded to a high of $33.85 and a low of $29.30 before closing the day at $31.40, an increase of 34.02%.

The communications company that services the health care industry reported earnings per share of 10 cents, which smashed analysts’ expectations for a loss per share of 7 cents.

Revenue was $47.35 million, which beat analyst expectations for revenue of $40 million.

The company also announced that it would work with Amazon to make its communications technology compatible with Amazon Alexa, which is also used in the health care field.

Mentioned in this article:

CNX Resources Corp. NYSE: CNX

STMicroelectronics NV NYSE: STM

Turning Point Brands Inc. NYSE: TPB

Vocera Communications Inc. NYSE: VCRA

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