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Morning Commentary: Pacira BioSciences convertibles in focus early, expand on debut
By Abigail W. Adams
Portland, Me., July 8 – Wednesday opened with the first new deal of the week hitting the convertibles secondary space.
Pacira BioSciences Inc. priced an upsized $350 million five-year convertible notes after the market close on Tuesday at par with a coupon of 0.75% and an initial conversion premium of 32.5%.
Pricing came on top of final talk for 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%, according to a market source.
The greenshoe was also upsized to $52.5 million.
The initial size of the offering was $300 million with a greenshoe of $45 million.
The new notes dominated activity in the secondary space on Wednesday and saw a large dollar-neutral expansion.
The 0.75% notes were changing hands between 102.5 and 103.5 in high-volume activity with stock up about 1%.
The notes were expanded 2.5 to 3 points dollar-neutral, a market source said.
More than $170 million of the bonds were on the tape about one hour into Wednesday’s session.
“It’s a good hedge name,” a source said.
Pacira BioSciences stock was changing hands at $54.98, an increase of 1.5%, shortly before 11 a.m. ET.
Approximately $211.1 of proceeds from the new offering were used to repurchase $185 million of the company’s outstanding 2.375% convertible notes due 2022.
Prior to the buyback, there was $345 million outstanding.
There were several prints of the 2.375% convertible notes at 113.192 early Wednesday, which appeared to be their buyback price.
About 11 accounts participated in the buybacks, a source said.
Pacira paid about 3 to 4 points above market value for the 2.375% notes, the source said.
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