Pacira BioSciences upsizes convertible notes offering; Livongo expands; Square active

By Abigail W. Adams

Portland, Me., July 7 – While the convertibles primary market has slowed its pace in the initial days of the third quarter, it has not stopped, with one deal on deck.

Pacira BioSciences Inc. plans to price an offering of five-year convertible notes after the market close on Tuesday.

The deal was in demand during bookbuilding with the offering upsizing, sources said.

Meanwhile, there was an uptick of activity in the secondary space.

Several names continued to post gains as the upward momentum in their stock continued despite broader equity markets giving back their gains from the previous session.

Livongo Health Inc.’s 0.875% convertible notes due 2025 were in focus with the notes making large gains on an outright and dollar-neutral basis.

Square Inc.’s convertible notes were also active with the notes gaining outright as stock continued to climb.

Pacira in demand

Pacira BioSciences offering of five-year convertible notes was in demand during bookbuilding with the deal upsizing.

Pacira now plans to price an upsized offering of $350 million after the market close on Tuesday, according to a market source.

The deal was heard to be pricing at par with a coupon of 0.75% and an initial conversion premium of 32.5%.

Initial price talk was for a coupon of 0.75% to 1.25% and an initial conversion premium of 30% to 35%.

The deal was heard to be marketed with assumptions of 600 basis points over Libor and a 40% vol., according to a market source.

Using those assumptions, the deal looked about 1 point cheap at the midpoint of talk.

Proceeds will be used to repurchase a portion of the company’s 2.375% convertible notes due 2022 in privately negotiated transactions.

With the pricing of the new notes relatively tight compared to other deals that have come recently, there may be an added kiss in the buyback of the 2.375% convertible notes, sources said.

“They must be paying some juicy price there,” a source said.

The 2.375% convertible notes were active on Tuesday with the notes changing hands around 111, which was largely in line with how the notes have been trading, a source said.

The 2.375% notes have been trading with about 29.5 points of premium over parity, the source said.

Livongo expands

Livongo Health’s 0.875% convertible notes due 2025 were making large gains on an outright and dollar-neutral basis as stock soared after the company upped its guidance.

The 0.875% notes were up almost 16 points outright to 141 in the late afternoon.

They expanded another 1.5 points dollar-neutral during Tuesday’s session after steadily logging gains since last week, a source said.

Livongo stock traded to a high of $95.45 and a low of $85.72 before closing the day at $93.76, an increase of 20.78%.

Stock skyrocketed to an all-time high after the data-based health coaching company released preliminary second-quarter results that exceeded expectations on Tuesday.

Livongo upped its guidance for the second quarter with revenue now expected to be $86 million to $87 million from the previously announced guidance of $73 million to $75 million.

Prior to the release of preliminary earnings, Livongo stock had been on a tear alongside other tech companies over the past week.

Square active

Square’s convertible notes continued to see heavy trading volume as stock continued its upward momentum on Tuesday.

The 0.5% convertible notes due 2023 gained about 7 points outright to trade up to a 172 handle in the late afternoon.

The 0.125% convertible notes due 2025 climbed about 4 points outright to 127.5.

While the notes were making gains on an outright basis, they were trading largely in line dollar-neutral, a source said.

Square stock traded to a high of $129.84 and a low of $120.03 before closing the day at $125.60, an increase of 5.57%.

Square stock set an all-time high on Tuesday after more than doubling over the past six months.

The Covid-19 pandemic has increased demand for cashless payment technologies such as Square, CNN reported.

Mentioned in this article:

Livongo Health Inc. Nasdaq: LVGO

Pacira BioSciences Inc. Nasdaq: PCRX

Square Inc. NYSE: SQ

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