Morning Commentary: Convertibles primary active for week; Talend, Invitae tap market

By Rebecca Melvin

New York, Sept. 6 – Two more deals priced for the convertibles market late Thursday, bringing the issuance tally up to an outsized $4 billion for this holiday-shortened week. Pricing for investors in the week overall left a little to be desired, but it wasn’t yet known how the latest two deals faired.

Invitae Corp. priced an upsized $300 million of 2% five-year convertible senior notes at par, with an initial conversion premium of 40%. The deal was upsized from $200 million talk, and pricing came at the midpoint of talked terms. Invitae shares were in the green, but just fractionally, and were holding in nevertheless at $21.30, which was up almost a dime.

The other deal was Talend SA’s €125 million of 1.75% five-year convertible notes, which also priced at par. That deal is billed as the first convertible note offering in the United States by a French issuer. It was marketed primarily to U.S. investors under Rule 144A, but due to the fact that it was still denominated in euros, meant that the market source Prospect News spoke with wasn’t going to look at it.

The Talend shares were fractionally negative, or down 22 cents at $38.50 in late morning trade.

For the week, there was a surprising rush to issue in the first days after Labor Day. Normally there is a gearing up that the market didn’t use this time around. The deals that priced were so-so in terms of pricing. Most of the stocks sold off, and four of the deals closed below issue price on their first day trading.

NextEra Energy Partners, LP was the outlier on the downside with a slight contraction on swap for its $1.5 billion of three-year mandatory convertible equity units that hit the market on Thursday.

The new tranches of Okta Inc. and Zillow Group Inc. also closed below issue with small expansion on a dollar-neutral basis. “If you got your hedge off, great,” but overall “not a great outcome,” a New York-based market source said.

Of this week’s issuance, Insulet Corp.’s newly priced 0.375% convertibles seemed to put in the strongest performance. According to the New York-based market source, those new notes expanded 1.3 points on hedge.

© 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.