Morning Commentary: Integer’s new convertible notes rocket on secondary market debut

By Abigail W. Adams

Portland, Me., Feb. 1 – Integer Holdings Corp. was the name of the day on Wednesday with its convertible notes offering playing to heavy demand during book building and making large outright and dollar-neutral gains on debut.

Integer priced an upsized $435 million of five-year convertible notes after the market close on Tuesday at par at the rich end of talk with a coupon of 2.125% and an initial conversion premium of 32.5%.

Price talk was for a coupon of 2.125% to 2.625% and an initial conversion premium of 27.5% to 32.5%.

The greenshoe was also upsized to $65 million.

The initial size of the offering was $375 million with a greenshoe of $56.25 million.

The deal played to heavy demand during book building with the offering more than 5x oversubscribed, a source said.

The notes were off to a strong start in the aftermarket with the notes trading up to 104 out of the gate.

They were changing hands at 103.25 versus a stock price of $67.80 a little more than one hour into the session.

The convertibles expanded 2.125 points dollar-neutral, a source said.

There was $84 million in reported volume.

Integer’s stock was seen at $67.70, an increase of 2.87%, shortly before 11 a.m. ET.

While Integer was in focus in the convertibles secondary space, markets were focused on the Fed with the Federal Open Market Committee’s rate hike decision due at 2 p.m. ET.

Indexes were in the red to start the session as the market’s confidence in a 25 basis point rate hike wavered ahead of the afternoon announcement.

The Dow Jones industrial average was down 339 points, or 1%, the S&P 500 index was down 0.57%, the Nasdaq Composite index was down 0.54% and the Russell 2000 index was down 0.22% shortly before 11 a.m. ET.

Expectations for a 25 bps rate hike have largely fueled equity gains in January.

Anything more aggressive will result in equities plummeting, a source said.

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