Impinj convertibles trade flat on debut; Ionis’ new notes skyrocket; Lumentum improves

By Abigail W. Adams

Portland, Me., Dec. 12 – More new paper entered the convertibles universe on Thursday with one new deal and one exchange offer pricing.

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

The new paper was active for a small deal but was largely flat on an outright and dollar-neutral basis, sources said.

Ionis Pharmaceuticals, Inc. was in focus on Thursday after the company announced a privately negotiated exchange of a portion of its 1% convertible notes due 2021 for new 0.125% convertible notes due 2024.

The new 0.125% convertible notes dominated activity in the secondary space and saw a large dollar-neutral expansion on debut.

Lumentum Holdings Inc.’s convertible notes remained major volume movers in the secondary space with both the new 0.5% convertible notes due 2026 and the 0.25% convertible notes due 2024 continuing to improve.

Impinj contracts

Impinj priced $75 million of seven-year convertible notes after the market close on Wednesday at the cheap end of talk at par with a coupon of 2% and an initial conversion premium of 27.5%.

Price talk was for a coupon of 1.5% to 2% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

While the deal modeled cheap at the midpoint of talk based on underwriters’ assumptions, it saw a lackluster reception in the secondary space.

The notes were quoted at 99.75 bid, 100.25 offered. They were contracted about 0.125 point dollar-neutral, a market source said.

The new 2% notes saw decent volume despite the small issue with $10 million on the tape by the late afternoon.

“Seems like some flippers,” a source said of the trading activity.

Impinj stock closed Thursday at $26.50, a decrease of 2.21%.

Stock cratered after the convertible notes announcement and closed Wednesday down more than 12%.

Ionis’ exchange

Ionis Pharmaceuticals’ convertible notes were the focus of trading activity on Thursday following news the company exchanged a portion of the principal amount of its 1% convertible notes due 2021 for new 0.125% convertible notes due 2024.

The new 0.125% convertible notes due 2024 dominated activity in the secondary space and saw a large dollar-neutral expansion on debut.

The 0.125% notes were changing hands just north of 103 in the late afternoon with about $50 million of the bonds in play, a market source said.

They expanded 2.75 points on a dollar-neutral, or hedged, basis.

The 1% convertible notes were also active. They were changing hands around 115.375 versus a stock price of $61.09 early in the session, a source said.

The notes continued to trade around 115.25 into the afternoon.

Ionis stock closed Thursday at $62.00, an increase of 0.5%.

Ionis announced an exchange for the 1% notes prior to the market open.

The pharmaceutical company will issue $398 million of new 0.125% convertible notes due 2024 in exchange for $340.2 million of the 1% notes.

Holders of the 1% notes that participated in the exchange gained 2 to 3 points in value, a market source said.

It was the “kiss” that made the exchange worthwhile.

The new 0.125% notes carry an initial conversion premium of 35% based on the closing price of stock on Wednesday.

The company will issue an additional $109.5 million of the 0.125% convertible notes for cash, according to the company news release.

Following the exchange, $344.8 million of the 1% notes will remain outstanding, according to the release.

Lumentum gains

Lumentum’s new 0.5% convertible notes due 2026 remained the major volume mover in the secondary space on Thursday with the notes continuing to improve after a lackluster secondary market debut.

The 0.5% notes jumped to 102.125 early in Thursday’s session as stock continued its upward momentum.

They climbed to 104 by the late afternoon.

The notes improved another 0.75 point dollar-neutral on Thursday after a 0.5 point expansion on Wednesday.

The notes accounted for $15 million of the $67 million in reported volume about one hour into Thursday’s session, according to a market source.

There was more than $45 million in reported volume by the late afternoon, a source said.

Lumentum’s 0.25% convertible notes due 2024 were also active and continuing to firm.

The notes were changing hands at 136.625 early in the session with about $5 million in reported volume.

They traded just shy of 141 by the late afternoon.

Lumentum stock traded to a low of $70.22 and a high of $75.03 before closing the day at $75.03, an increase of 7.48%.

Thursday was a strong day for equities as headlines broke about an imminent phase 1 trade deal between the United States and China.

In addition to a strong day for equities, Lumentum stock was buoyed after Susquehanna Bancshares initiated coverage of the company and gave stock a bullish $90.00 price target.

Lumentum’s new 0.5% convertible notes dropped below par on their secondary market debut on Wednesday and were flat dollar-neutral.

However, the notes have rebounded over the past two sessions as stock improved.

Mentioned in this article:

Impinj Inc. Nasdaq: PI

Ionis Pharmaceuticals, Inc. Nasdaq: IONS

Lumentum Holdings Inc. Nasdaq: LITE

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