Morning Commentary: New Insulet edges up after upsizing, pricing at rich end of talk

By Rebecca Melvin

New York, Sept. 4 – Insulet Corp.’s newly priced 0.375% convertibles added 0.25 point on an outright basis in trade early Wednesday and a full point on a swap basis after the deal was upsized to $700 million and priced at the rich end of talk late Tuesday, according to market sources.

The Insulet notes were quoted at 100.25 outright and 101 on swap versus a share price of $167.95. Shares of the Billerica, Mass.-based medical device maker were $163.21 last, which was down $4.73, or 2.8%, on the day.

The Insulet deal was upsized from an expected $660 million size. Talk was for a yield of 0.375% to 0.875% and an initial conversion premium of 30% to 35%.

In connection with the offering, the company entered into capped call transactions with certain counterparties. The strike price on those transactions was set at $335.90 per share, representing a premium from the issuer’s perspective of 100%.

Also in the primary market, convertibles players are waiting for deals to price from Zillow Group Inc., Okta Inc., Aerie Pharmaceuticals Inc. and Encore Capital Group Inc., which are expected to price after the market close. All the deals were announced on Tuesday, the first trading day of the week after U.S. financial markets were closed on Monday in observance of Labor Day.

The financial markets reopened Tuesday with a burst of activity not only in convertibles but also in U.S. investment-grade straight debt. There was a record number of issuers pricing deals on Tuesday in the straight market, a New York-based market source said.

© 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.