Alphatec on tap; Envestnet in focus; Jazz down outright, expands dollar-neutral

By Abigail W. Adams

Portland, Me., Aug. 4 – The convertible primary market returned to action on Wednesday following a weeks-long drought with one new offering on deck.

Alphatec Holdings Inc. plans to price $250 million in five-year convertible notes after the market close on Thursday with price talk for a coupon of 0.5% to 1% and an initial conversion premium of 30% to 35%, according to a market source.

Morgan Stanley & Co. LLC is lead left bookrunner for the Rule 144A offering, which carries a greenshoe of $37.5 million.

If completed, the offering will be the first deal to price since Shift4 Payments Inc.’s $632.5 million offering of 0.5% convertible notes due 2027, which priced on July 21.

Meanwhile, there was an uptick of activity in the convertible secondary space with the market better to buy and players sifting through outstanding issues looking for a deal.

There was $106 million in reported volume about one hour into the session and $400 million on the tape about one hour before the market close.

“It’s perked up a bit,” a market source said.

Equity benchmarks were mixed on Wednesday with growth stocks again in favor as a weak payroll report again called the status of the economic recovery into question.

The Dow Jones industrial average closed the day down 324 points or 0.92%, the S&P 500 index down 0.46% and the Russell 2000 index down 1.23%.

However, the Nasdaq Composite closed the day up 0.13%.

Envestnet Inc.’s 1.75% convertible notes due 2023 were the top trader of Wednesday’s session although with little movement in price.

ON Semiconductor Corp.’s 0% convertible notes due 2027 remained active with the notes continuing to gain on an outright basis.

Jazz Pharmaceuticals plc’s 2% exchangeable notes due 2026 were down outright but up dollar-neutral as stock tanked following the company’s earnings report.

Envestnet in focus

Envestnet’s issue of 1.75% convertible notes due 2023 was the top-traded name in the secondary space on Wednesday although with little movement in price.

The 1.75% convertible notes were changing hands at 122.125 versus a stock price of $74.38 early in the session, according to a market source.

They were seen changing hands at 121.625 later in the session.

There was more than $15 million in reported volume.

Envestnet stock traded to a low of $72.56 and a high of $74.88 before closing the day at $74.34, an increase of 0.02%.

There was no clear catalyst to the trading activity.

However, the notes did climb past their 50-day moving average which may have caused some holders to take in some profits, a source said.

ON Semiconductor active

ON Semiconductor’s 0% convertible notes due 2027 remained active on Wednesday with the notes continuing to gain on an outright basis.

The 0% notes rose to a 114-handle on Wednesday with the notes well-bid, a source said.

ON Semiconductor stock traded to a high of $46.29 and a low of $45.25 before closing the day at $45.67, an increase of 0.64%.

The 0% notes have been on an upward trend since Monday when the company reported a large earnings beat.

Jazz expands

Jazz Pharmaceuticals’ 2% exchangeable notes due 2026 were active on Wednesday with the notes down outright but expanding dollar-neutral following the company’s earnings report.

The 2% notes sank about 7 points outright with stock off more than 10%.

They were changing hands at 123.5 in the late afternoon.

However, the notes improved on a dollar-neutral basis on the move down and were expanded about 0.5 point on hedge, a source said.

Jazz stock traded to a high of $169.04 and a low of $153.33 before closing the day at $153.55, a decrease of 10.47%.

Stock tanked despite an earnings beat.

The pharmaceutical company reported earnings per share of $3.90 versus analyst expectations for earnings of $3.55.

Revenue was $751.8 million versus analyst expectations for revenue of $743.2 million.

Mentioned in this article:

Envestnet Inc. NYSE: ENV

Jazz Pharmaceuticals plc Nasdaq: JAZZ

ON Semiconductor Corp. Nasdaq: ON

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