Morning Commentary: Novocure convertible notes offering on tap, looks cheap

By Abigail W. Adams

Portland, Me., Nov. 2 – As equity benchmarks rebounded from one of the most dramatic weekly declines since March, the convertibles primary market launched into action with one deal on deck.

Novocure Ltd. plans to price $500 million of five-year convertible notes after the market close on Monday with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 42.5% to 47.5%.

The deal was heard to be marketed with assumptions of 300 basis points over Libor and a 45% vol., a source said.

Using those assumptions, the deal looked 4.125 points cheap at the midpoint of talk, sources said.

Sources were surprised to see the deal on the eve of the U.S. presidential election.

However, equity benchmarks saw a strong start to the week with the Dow Jones industrial average, S&P 500 and Nasdaq composite all up more than 1% about one hour into Monday’s session.

The secondary space saw decent trading volume early Monday with $75 million in reported volume about one hour into the session.

However, activity was dispersed over a wide variety of names with no name seeing more than $5 million in reported volume, a source said.

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