Morning Commentary: PROS Holdings convertible notes in focus; Pacira Biosciences active

By Abigail W. Adams

Portland, Me., May 1 – While earnings related news continued to dampen convertibles new issue activity, the primary market remained active with a new deal on deck.

PROS Holdings Inc. plans to price $125 million of five-year convertible notes after the market close on Wednesday with price talk for a coupon of 0.75% to 1.25% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

The deal appeared to be fair value to about 0.5 point cheap using assumptions of 300 bps over Libor and a 32% vol., a market source said.

Proceeds from the offering will be used to exchange or retire the company’s outstanding 2% notes due Dec. 1, 2019.

The 2% notes jumped almost 10 points outright to 149 on April 26 as stock soared following an earnings beat. PROS stock hit a 52-week high of $53.35 following its earnings report.

As market players eyed the new offering on deck, volume remained light in the secondary space with $49 million on the tape about one hour into Wednesday’s session.

Pacira Biosciences Inc.’s 2.375% convertible notes due 2022 were active and posting gains alongside stock following the Food and Drug Administration’s rejection of a competitor’s product.

The 2.375% notes rose more than 4 points outright to 104.5, a market source said.

Pacira stock was $46.00, an increase of 15.52%, shortly before 11 a.m. ET.

Stock soared following news the FDA rejected Heron Therapeutics’ application for a new pain management drug.

Pacira is scheduled to report earnings before the market open on Thursday.

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