Morning Commentary: Pacira BioSciences convertible offering eyed; Livongo in focus

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 $300 million of five-year convertible notes after the market close on Tuesday with price talk for a coupon of 0.75% to 1.25% and an initial conversion premium of 30% to 35%.

The deal was heard to 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.

The 2.375% convertible notes were active early in Tuesday’s session 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.

Meanwhile, as market players eyed the new deal in the pipeline, there was an uptick of activity in the secondary space with $89 million of reported volume about one hour after the opening bell.

Livongo Health Inc.’s 0.875% convertible notes due 2025 jumped on an outright basis as stock soared.

The 0.875% notes were up almost 15 points outright to 140.125 with stock up more than 20% early in the session, according to a market source.

The notes were in focus with more than $11 million in reported volume.

Livongo stock traded up to $94.45, an increase of 21.45%, shortly before 11 a.m. ET.

Stock skyrocketed after the data-based health coaching company released preliminary second-quarter results that exceeded expectations.

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