NuVasive convertible notes in focus, up on swap; Avadel skyrockets; Pegasystems active

By Abigail W. Adams

Portland, Me., Feb. 21 – The convertibles secondary space saw a quiet end to the week with a little more than $400 million in reported volume heading into the market close.

Few names saw concentrated trading activity.

However, NuVasive Inc.’s 2.25% convertible notes due 2021 were in focus as stock dropped following its fourth-quarter earnings report.

While the notes were down outright, they were gaining on swap.

While activity paled in comparison to Thursday’s session, Pegasystems Inc.’s newly priced 0.75% convertible notes due 2025 remained a major volume mover in the secondary space.

The notes were coming in on an outright basis but were largely flat dollar-neutral.

Avadel Pharmaceuticals plc’s 4.5% convertible notes due 2023 skyrocketed on both an outright and dollar-neutral basis on the heels of a new capital raise.

NuVasive expands

NuVasive’s 2.25% convertible notes due 2021 were in focus on Friday as stock sold off following its fourth quarter earnings report.

While the notes were down on an outright basis, they were expanding on a dollar-neutral, or hedged, basis, a source said.

The 2.25% convertible notes traded down about 4.5 points outright to 129 early in the session.

They were seen changing hands at 130 versus a stock price of $74.80 in the late afternoon.

The notes expanded about 1 point on a dollar-neutral basis on the move down, a market source said.

There was a good mix of swap and outright trading activity.

With more than $22 million in reported volume by the late afternoon, the notes were the most actively traded in the secondary space.

While the notes were active on Friday, “they don’t have a lot left to them,” a source said.

The notes become provisionally callable on March 20.

However, stock was trading below the provisional call price on Friday.

NuVasive stock traded to a high of $77.11 and a low of $73.38 before closing the day at $75.16.

Stock was trading off despite a fourth-quarter earnings beat.

The San Diego, Calif.-based medical device company reported fourth-quarter earnings per share of 73 cents versus analyst expectations for earnings per share of 63 cents.

Revenue was $310.4 million versus analyst expectations for revenue of $304.93 million.

Pegasystems comes in

While activity surrounding Pegasystems’ 0.75% convertible notes due 2025 tempered, the notes remained one of the most actively traded issues in the secondary space on Friday.

The notes were coming in on an outright basis as stock dropped on a weak day for equities, especially for the tech sector.

The 0.75% notes traded down about 1.5 points to 102.75 on Friday.

However, the notes were largely moving in line dollar-neutral, a market source said.

There was a little more than $15 million in reported volume by the late afternoon.

Pegasystems stock traded to a high of $101.99 and a low of $98.55 before closing the day at $99.07, a decrease of 2.73%.

The recently priced 0.75% notes were in high demand on their secondary market debut on Thursday.

The notes closed Thursday north of 104 and traded up about 2.5 points dollar-neutral.

Avadel skyrockets

Avadel’s 4.5% convertible notes due 2023 skyrocketed on both an outright and dollar-neutral basis on Friday on the heels of a new capital raise.

The 4.5% notes traded up more than 15 points in intraday trading to 104, according to a market source.

They were expanded 5 to 6 points dollar-neutral.

The notes moved to a 60% delta on Friday, a source said.

The small illiquid issue was active on Friday with almost $10 million in reported volume.

Avadel stock traded as high as $9.64 before closing the day at $9.40, an increase of 32.02%.

Stock skyrocketed following news the biotech company, which is focused on developing a treatment for excessive daytime sleepiness, sold an offering of American Depositary Shares and series A convertible preferred shares to a group of investors in a private placement.

Investors included Vivo Capital, Avoro Capital Advisors, RTW Investments, Venrock Healthcare Capital Partners, Acuta Capital and KVP Capital, according to a company news release.

Gross proceeds from the offering were $65 million.

While the company is conducting a Phase 3 clinical trial for its product, it historically has never delivered, a market source said.

Mentioned in this article:

Avadel Pharmaceuticals plc Nasdaq: AVDL

NuVasive Inc. Nasdaq: NUVA

Pegasystems Inc. Nasdaq: PEGA

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