Teladoc, Colliers, PetIQ convertible notes expand; Penn Gaming, Pioneer Natural rebound

By Abigail W. Adams

Portland, Me., May 15 – The convertibles primary market rounded out another record setting week with three deals pricing after the market close on Thursday.

Teladoc, Inc. priced an upsized $850 million of seven-year convertible notes, Colliers International Group Inc. priced $200 million of five-year convertible notes and PetIQ Inc. sold $125 million of six-year convertible notes.

The three deals brought the weekly tally for new deal volume to $7.84 billion over 15 deals, making the May 11 week the busiest week year to date for new deal activity.

The new paper from Teladoc, Colliers and PetIQ was putting in a strong performance in the secondary space with each deal making gains on an outright and dollar-neutral basis.

Several of the recent deals that were struggling below par also improved on Friday.

Penn National Gaming Inc.’s 2.75% convertible notes due 2026 and Pioneer Natural Resources Co.’s 0.25% convertible notes due 2025 were making large gains on an outright and dollar-neutral basis.

While Southwest Airlines Co.’s 1.25% convertible notes due 2025 continued to struggle on Friday, the notes were major volume movers as the issue joined the Refinitiv convertible investment-grade index.

Teladoc gains

Teladoc priced an upsized $850 million of seven-year convertible notes after the market close on Thursday at par at the cheap end of talk with a 1.25% coupon and an initial conversion premium of 35%.

Price talk was for a coupon of 0.75% to 1.25% and an initial conversion premium of 35% to 40%.

The greenshoe was also upsized to $150 million.

The initial size of the deal was $800 million with a greenshoe of $120 million.

The new paper was making gains on an outright and dollar-neutral basis.

The notes traded to a low of 99.75 with stock off soon after the opening bell.

However, they traded up to a 103-handle as stock rallied into the afternoon.

The 1.25% notes expanded about 0.75 point to 1 point dollar-neutral, a source said.

The Purchase, N.Y.-based telemedicine and virtual health care company entered into privately negotiated transactions to exchange $228.2 million of the principal amount of the 3% convertible notes due 2022.

The company paid $231.1 million in cash and 3.9 million in shares to settle the exchanges.

Prior to the exchange, the 3% notes, which were trading at quadruple par, had $275 million outstanding, according to Trace data.

Teladoc stock traded to a low of $175.45 and a high of $184.68 before closing the day at $184.23, an increase of 2.61%.

Colliers outperforms

Colliers priced $200 million of five-year convertible notes after the market close on Thursday at par with a coupon of 4% and an initial conversion premium of 32.5%.

Pricing came at the cheap end of talk for a coupon of 3.5% to 4% and at the midpoint of talk for an initial conversion premium of 30% to 35%.

The new paper outperformed on an outright and dollar-neutral basis on Friday.

The 4% notes traded up to 105 on an outright basis and were expanded 2.5 points dollar-neutral, a market source said.

“They’re doing well,” a source said.

Colliers stock traded to a low of $43.49 and a high of $47.29 before closing the day at $46.49, an increase of 6.26%.

PetIQ expands

PetIQ priced $125 million of six-year convertible notes after the market close on Thursday at par at the cheap end of talk with a coupon of 4% and an initial conversion premium of 25%.

Price talk was for a coupon of 3.5% to 4% and an initial conversion premium of 25% to 30%, according to a market source.

The notes were also putting in a strong performance in the secondary space.

The 4% notes traded up to 103 and were expanded 1 point dollar-neutral, a market source said.

PetIQ stock traded to a low of $23.60 and a high of $26.04 before closing the day at $25.71, an increase of 8.39%.

The rebound

After struggling below par for the past few sessions, Penn National Gaming’s 2.75% convertible notes due 2026 skyrocketed on Friday as stock caught a bid.

The 2.75% notes jumped more than 8 points outright. They were trading on a 95-handle on Thursday but closed Friday at 103.25, sources said.

The notes expanded 1 point dollar-neutral.

Penn stock traded to a low of $17.48 and a high of $19.97 before closing the day at $19.35, an increase of 9.2%.

Pioneer Natural Resources’ 0.25% convertible notes due 2025 also popped above par after struggling below for the past few sessions.

The 0.25% notes traded up to 100.625 Friday afternoon.

They expanded about 0.5 point dollar-neutral.

Pioneer stock traded to a low of $81.58 and a high of $85.16 before closing the day at $82.86, an increase of 0.80%.

Southwest Airlines active

While Southwest Airlines’ 1.25% convertible notes due 2025 continued to struggle on Friday, they were among the major volume movers in the space as the notes were added to the Refinitiv convertible investment-grade index.

The 1.25% notes were changing hands on a 92-handle in the high-volume activity.

Southwest Airlines stock traded to a high of $24.87 and a low of $23.75 before closing the day at $23.87, a decrease of 3.59%.

While initially an outperformer, Southwest Airlines’ convertible notes have sold off since Warren Buffett announced he was dumping his stake in several airlines, including Southwest Airlines.

Mentioned in this article:

Colliers International Group Inc. Nasdaq: CIGI

Pioneer Natural Resources Co. NYSE: PXD

Penn National Gaming Inc. Nasdaq: PENN

PetIQ Inc. Nasdaq: PETQ

Teladoc, Inc. NYSE: TDOC

Southwest Airlines Co. NYSE: LUV

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