Lumentum deal added to convertibles calendar; Viavi fades; PTC drops on clinical trial news

By Stephanie N. Rotondo

Seattle, March 2 – There continued to be a new issue focus in the convertible bond market on Thursday.

Ahead of the open, Lumentum Holdings Inc. announced a $350 million Rule 144A offering of seven-year convertible senior notes, talked at a 0.25% to 0.75% yield and an initial conversion premium of 25% to 30%.

Goldman Sachs & Co. is running the books.

In response, the company’s stock declined $2.15, or 4.48%, to $45.75.

The deal was slated to price after the market’s close, but details were not available as of press time.

Notably, Viavi Solutions Inc. – which, along with Lumentum, was part of a split of JDSU in 2015 – priced a $400 million issue of 1% convertible senior notes due 2024 on Tuesday. Since pricing, the issue has done well but fell below par on Thursday.

The company’s shares also waned, slipping 26 cents, or 2.59%, to $9.78.

The deal came with a 32.5% initial conversion premium via J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and Credit Suisse Securities (USA) LLC.

From Wednesday’s business, Square Inc.’s $400 million of 0.375% convertible senior notes due 2022 dipped a touch to 102.25, according to one market source.

Another trader saw the issue at 102.125 to 102.5 toward the end in the day. That compared to a 102.5 to 102.75 range earlier in the day.

The underlying equity was slightly better in early trading but drifted down by the end of the day.

The stock lost 23 cents, or 1.34%, to close at $16.99.

The deal came via Goldman Sachs and J.P. Morgan Securities LLC with an initial conversion premium of 32.5%, which was at the mid-line of talk. Yield came rich to the 0.375% to 0.875% talk.

The deal was also upsized from $350 million.

Meanwhile, Silicon Laboratories Inc.’s $350 million of 1.375% convertible senior notes due 2022 – a deal priced late Tuesday with an initial conversion premium of 37.5% – were seen “around 103,” a trader said.

That trader had pegged the paper in a 102.75 to 103.25 context at mid-morning.

Another source called the issue unchanged to half a point higher at 103 bid, 103.5 offered.

The company’s shares were also trending higher, rising a 35 cents to $69.50.

The deal came in the middle of the 1.25% to 1.75% yield talk and on the rich end of the 32.5% to 37.5% premium talk.

Goldman Sachs and Wells Fargo Securities LLC were the bookrunners.

“They did well,” a trader said of both the Square and Silicon deals.

PTC tanks

PTC Therapeutics Inc.’s 3% convertible notes due 2022 were under pressure on Thursday, after the company said its latest clinical trial had hit an obstacle.

A trader quoted the convertibles at 65 bid, 66 offered, which compared to 71 bid, 72 offered.

Another source pegged the paper just south of 65, off about 6 points.

The company’s shares didn’t do so well either on the news, falling $2.60, or 19.73%, to $10.58.

PTC’s ataluren drug, a treatment for cystic fibrosis, failed to show any improvements in patients after 48 weeks, compared to a placebo, the company said.

Given the results, PTC is halting development of the drug and pulling its pending marketing application in Europe.

The drug as a treatment for CF has also been nixed in the U.S. However, PTC said it will continue to fight the Food & Drug Administration for the right to market the drug for Duchenne muscular dystrophy.

The pharmaceutical company is based in South Plainfield, N.J.

Mentioned in this article:

Lumentum Holdings Inc. Nasdaq: LITE

PTC Therapeutics Inc. Nasdaq: PTCT

Silicon Laboratories Inc. Nasdaq: SLAB

Square Inc. NYSE: SQ

Viavi Solutions Inc. Nasdaq: VIAV

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.