Amphastar convertibles on deck; Corporate Office lower outright; Advanced Energy rises

By Abigail W. Adams

Portland, Me., Sept. 11 – The convertibles primary market remained active on Monday with one deal launching after $4.395 billion over seven deals cleared the market the previous week.

Amphastar Pharmaceuticals Inc. plans to price $300 million of long five-year convertible notes after the market close on Tuesday with price talk for a coupon of 1.5% to 2% and an initial conversion premium of 30% to 35%, according to a market source.

Jefferies LLC (lead left), BofA Securities Inc., Wells Fargo Securities LLC and J.P. Morgan Securities LLC are bookrunners for the Rule 144A offering, which carries a greenshoe of $45 million.

The calendar remains robust with more deals expected as the week progresses, sources said.

Meanwhile, the convertibles secondary space was quiet on Monday with equities strong ahead of the release of a key piece of inflationary data.

The Dow Jones industrial average closed the session up 87 points, or 0.25%, the S&P 500 index closed up 0.67%, the Nasdaq Composite index closed up 1.14% and the Russell 2000 index closed up 0.14%.

All eyes will be on the Consumer Price Index report slated for release on Wednesday to determine if the late August rally sparked by macro data will have staying power.

There was $71 million in reported convertibles trading volume about one hour into the session and $339 million on the tape in the late afternoon with new deals continuing to dominate activity.

Corporate Office Properties Trust’s 5.25% exchangeable notes due 2028 (Baa3/BBB-) were lower alongside stock in heavy volume although the notes were largely unchanged dollar-neutral.

Advanced Energy Industries Inc.’s 2.5% convertible notes due 2028 continued to add on an outright and dollar-neutral basis after a strong aftermarket debut.

Seagate HDD Cayman’s 3.5% exchangeable notes due 2028 were lower outright although the notes were active amid little movement in price.

Vishay Intertechnology Inc.’s 2.25% convertible notes due 2030 (BB+) continued to underperform with the notes lower on an outright and dollar-neutral basis.

Corporate Office lower

Corporate Office Properties’ 5.25% notes due 2028 saw the heaviest volume of Monday’s session.

While the notes were lower outright alongside stock, they maintained the large dollar-neutral expansion made during their aftermarket debut.

The 5.25% notes were changing hands at 103 versus a stock price of $25.51 early in the session, according to a market source.

They traded at 102.5 versus a stock price of $24.89 in the late afternoon.

There was $22 million in reported volume.

Corporate Office’s stock traded to a low of $24.79 and a high of $25.65 before closing at $25.13, off 0.97%.

The performance of the REIT’s convertible notes was a surprise given the carnage in the sector and the headwinds plaguing commercial real estate.

The notes expanded about 1.5 points on their aftermarket debut last Friday.

Advanced Energy gains

Advanced Energy’s 2.5% notes due 2028 continued to notch gains after a strong start in the aftermarket.

The notes gained about 1 point outright with stock strong early in the session but closing largely unchanged.

The notes were seen at 101.75 versus a stock price of $105.25 early in the session.

They traded at 101.875 versus a stock price of $104.57 in the late afternoon, according to a market source.

There was $13 million in reported volume.

Advanced Energy’s stock traded to a high of $106.20 and a low of $103.87 before closing at $104.23, an increase of 0.12%.

The notes gained about 2 points dollar-neutral on their aftermarket debut last Friday.

Seagate active

Seagate’s 3.5% notes due 2028 were active although little changed on Monday.

The notes were seen at 101.875 versus a stock price of $65.11 early in the session, according to a market source.

They were changing hands at 101.625 versus a stock price of $63.97 in the late afternoon.

There was $11 million in reported volume.

Seagate’s stock traded to a low of $63.41 and a high $65.79 before closing at $64.31, a decrease of 1.62%.

The notes also saw a strong aftermarket debut and expanded about 1.5 points dollar-neutral.

Vishay lower

Vishay’s 2.25% convertible notes due 2030 continued to move lower their second day in the secondary space.

The 2.25% notes remained on a 99-handle. They were trading at 99 versus a stock price of $24.78 in the late afternoon, according to a market source.

The notes were off about 0.25 point dollar-neutral.

Vishay’s stock traded to a low $24.58 and a high of $25.09 before closing at $25.04, up 1.91%.

Vishay’s 2.25% convertible notes underperformed on their aftermarket debut with the notes falling to a 99-handle.

The deal came as a refinancing with the notes pricing tighter than some of the other offerings in the market.

Mentioned in this article:

Advanced Energy Industries Inc. Nasdaq: AEIS

Amphastar Pharmaceuticals Inc. Nasdaq: AMPH

Corporate Office Properties Trust NYSE: OFC

Seagate Technology Holdings plc Nasdaq: STX

Vishay Intertechnology Inc. NYSE: VSH

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