Impinj convertible offering eyed; Everbridge convertible notes hit market; Lumentum up

By Abigail W. Adams

Portland, Me., Dec. 11 – New convertibles paper was in focus on Wednesday as issuers took advantage of one of the last weeks of the year for new deal activity.

Impinj Inc. plans to price $75 million of seven-year convertible notes after the market close on Wednesday.

Sources pegged the deal as cheap based on underwriters’ assumptions. However, the small offering was most likely a club deal, a market source said.

Everbridge Inc. priced $375 million of five-year convertible notes after the market close on Tuesday.

The new paper dominated activity in the secondary space.

While the notes dropped below par as stock traded off, they were expanding dollar-neutral.

Lumentum Holdings Inc.’s new 0.5% convertible notes due 2026 improved on Wednesday with the notes popping back above par and seeing a slight dollar-neutral expansion.

Outside of the new paper, Dermira Inc.’s 3% convertible notes due 2022 saw renewed attention with the notes trading up as stock soared following news the FDA granted fast-track designation to a product in its pipeline.

Impinj eyed

Impinj plans to price $75 million of seven-year convertible notes after the market close on Wednesday with price talk for a coupon of 1.5% to 2% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

Underwriters were marketing the deal with a credit spread of 550 basis points over Libor and a 40% vol., sources said.

Using those assumptions, the deal modeled up to 2.5 points cheap, a source said.

However, some felt the deal deserved a wider credit spread and higher vol., especially given its market cap.

The Seattle-based manufacturer of radio frequency identification devices and software has a small market cap of $682 million.

Using a credit spread of 700 bps over Libor and a 45% vol., the deal modeled out to 0.87 point cheap, the source said.

However, the small offering was not on the radar of many market sources. The deal was most likely a club deal, a source said.

Impinj stock was taking a hit following the announcement of the convertible notes offering.

Stock closed Wednesday at $27.10, a decrease of 12.07%.

Everbridge expands

Everbridge priced $375 million of five-year convertible notes after the market close on Tuesday at par with a coupon of 0.125% and an initial conversion premium of 35%, according to a market source.

Pricing came at the midpoint of talk for a coupon of 0% to 0.25% and an initial conversion premium of 32.5% to 37.5%, according to a market source.

The new paper was active in the secondary space with more than $67 million in reported volume by the late afternoon.

While the 0.125% notes traded up early in the session, they dropped below par as stock continued to trade off into the afternoon.

The notes were seen at 100.25 early in the session with stock down almost 2%. However, by the late afternoon, they traded down to 98.75.

While below par, the 0.125% notes were expanding dollar-neutral. The notes were up about 0.75 point on hedge, a market source said.

Everbridge stock traded to a high of $83.15 and a low of $78.14 before closing the day at $79.82, a decrease of 4.1%.

Lumentum improves

Lumentum’s newly priced 0.5% convertible notes due 2026 continued to see active trading in the secondary space with the notes improving their second day in the aftermarket.

The 0.5% notes popped above par as stock rebounded.

The notes were at 99.625 early in the session but gained to 100.5 in the late afternoon.

After falling flat on a dollar-neutral basis on Tuesday, the notes expanded about 0.5 point on Wednesday.

Lumentum’s 0.25% convertible notes due 2024 were also improved on Wednesday.

The notes were changing hands at 132.625 early in the session and climbed to 133.75 in the late afternoon.

The 0.25% notes pared their losses on a dollar-neutral basis. They were up about 0.375 point on hedge on Wednesday, a market source said.

However, they were still down about 0.375 point since Lumentum announced its new offering.

Lumentum stock traded to a high of $70.03 before closing the day at $69.81, an increase of 1.28%.

Dermira trades up

Dermira’s 3% convertible notes due 2022 saw renewed attention in the secondary space with stock soaring after the Food and Drug Administration granted fast-track designation to a product in the biotech company’s pipeline.

The 3% convertible notes rose 1.5 points outright to 88.5, according to a market source.

While volume was light, the notes were also trading up on Tuesday. They began the week on an 84 handle.

Dermira stock closed Wednesday near the intraday high at $11.67, an increase of 16.58%.

Stock was also up 10% on Tuesday.

The 3% convertible notes are a light delta name that trades mostly for their yield, a source said. The yield dropped to 8.3% on Wednesday.

However, the prospects for the company improved following news the FDA fast tracked the approval process for lebrikizumab, a treatment for atopic dermatitis.

Mentioned in this article:

Dermira Inc. Nasdaq: DERM

Everbridge Inc. Nasdaq: EVBG

Impinj Inc. Nasdaq: PI

Lumentum Holdings Inc. Nasdaq: LITE

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