Euronet Worldwide convertibles in focus; DexCom notes active; Dermira gains continue

By Abigail W. Adams

Portland, Me., March 19 – The convertible secondary space was active on Tuesday with more than $106 million on the tape about one hour into the session and $500 million on the tape by the late afternoon.

While the secondary space was active, there were few notable price movements, sources said.

Euronet Worldwide Inc.’s 0.75% convertible notes due 2049 continued to dominate activity in the secondary space with the notes again on the rise.

Dermira Inc.’s 3% convertible notes due 2022 continued to improve with the credit of the company tightening in the wake of a positive clinical trial.

DexCom Inc.’s convertible notes were also active with one issue expanding and another trading largely in line.

In the cannabis sector, Tilray Inc.’s 5% convertible notes due 2023 were losing ground in the wake of its earnings report.

However, Aurora Cannabis Inc.’s 5.5% convertible notes due 2024 continued to post gains.

Euronet in focus

Euronet Worldwide’s 0.75% convertible notes due 2049 again dominated activity in the secondary space with the notes continuing to improve in the high-volume activity.

The notes were changing hands at 106 early in the session and had risen to 106.625 toward the market close.

More than $76 million of the bonds had traded by the late afternoon.

Euronet stock closed Tuesday at $140.47, an increase of 0.53%.

The notes have skyrocketed in high-volume activity since hitting the market on March 14.

The $25 million greenshoe on the deal was recently exercised in full, lifting the total size of the deal to $525 million.

The greenshoe was small given the size of the convertible notes offering, sources noted. The company may have had a cap on the capital they were able to raise.

Dermira’s gains continue

Dermira’s 3% convertible notes due 2022 continued to post gains in the secondary space after positive clinical results sent stock soaring and tightened the company’s credit spread.

The 3% notes rose another 3.25 points outright to 89.125 versus a stock price of $13.77. The yield on the notes dropped to 6.89% on Tuesday.

Dermira stock continued to post gains after a more than 80% increase on Monday.

Stock closed Tuesday at $14.14, an increase of 12.13%.

While there were a few trades on swap, the majority of trading activity in the notes has been outright, a market source said.

In addition to an enormous stock move, the credit on the notes tightened significantly.

The notes used to trade with a credit spread of 1,000 basis points. However, the credit tightened to below 600 bps, a market source said.

Dermira’s convertible notes have been active and posting gains since the biotechnology company released positive clinical results from its phase 2 study of Lebrikizumab, a treatment for a severe form of eczema.

The phase 3 trial is set to take place in the latter half of 2019.

DexCom active

DexCom’s convertible notes also saw some activity on Tuesday with one issue expanding and another largely trading in line dollar-neutral, sources said.

DexCom’s 0.75% convertible notes due 2022 were flat in active trading, a market source said.

The notes were changing hands at 156.375 versus a stock price of $140.37. About $6.5 million of the bonds changed hands during Tuesday’s session.

DexCom’s 0.75% convertible notes due 2023 expanded 0.375 point to 0.5 point dollar-neutral, a market source said.

The notes were changing hands at 114.8 in the late afternoon. About $5 million of the bonds were on the tape by the late afternoon.

DexCom stock closed Tuesday at $146.86, an increase of 0.49%.

The cannabis sector

The convertible notes from the cannabis sector saw some movement on Tuesday following Tilray’s fourth-quarter earnings report.

Tilray’s 5% convertible notes due 2023 were losing ground following the report as stock rallied early in the session but closed the day in the red.

The 5% convertible notes were quoted at 83 bid, 84.5 offered versus a stock price of $70.50.

Stock traded as high as $75.55 during Tuesday’s session but closed the day at $69.75, a decrease of 3.45%.

While Tilray beat on the top line, it missed analyst expectations on the bottom line.

Tilray reported revenue of $15.5 million, which beat analyst expectations for revenue of $14.1 million.

However, Tilray reported a loss per share of 31 cents versus analyst expectations for a loss per share of 14 cents.

While Tilray’s convertible notes continued to struggle, Aurora Cannabis’ 5.5% convertible notes due 2024 were making gains.

The 5.5% convertible notes were quoted at 146.25 bid, 147.5 offered versus a stock price of $10.00.

Aurora Cannabis stock traded as high as $10.32 but closed the day at $9.96, an increase of 0.2%.

Aurora Cannabis convertible notes have skyrocketed since hitting the secondary space in mid-January.

Activist investor Nelson Peltz’s recent appointment as a strategic adviser to Aurora Cannabis has propelled the stock over the past week.

The company is also the best credit in the sector, a market source said.

Mentioned in this article:

Aurora Cannabis Inc. NYSE: ACB

Dermira Inc. Nasdaq: DERM

DexCom Inc. Nasdaq: DXCM

Euronet Worldwide Inc. Nasdaq: EEFT

Tilray Inc. Nasdaq: TLRY

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