Convertible primary caps one of the busiest weeks YTD; Shockwave jumps on debut; Amyris settles

By Abigail W. Adams

Portland, Me., Aug. 11 – After an extended drought when no deals cleared the market in July, the convertible bond primary market unleashed one of the busiest weeks of the year with $3.535 billion pricing in six deals.

Shockwave Medical Inc. capped the high-volume week and priced an upsized $650 million in five-year convertible notes after the market close on Thursday.

The Aug. 7 week ties for the busiest week of the year by number of transactions and the third busiest week of the year by dollar amount, although it is in the running for the second busiest if all or some of the greenshoes are exercised.

The primary market is expected to remain active in the week ahead with several deals heard to be on deck.

Shockwave’s new notes hit the secondary space on the heels of more inflationary data with the Producer Price Index report coming in hotter than expected.

The report trails the Consumer Price Index report which came in below estimates although it still reflected an increase in inflation.

Treasuries were weak and equity indexes were mixed following the latest data with the Dow Jones industrial average closing Friday up 105 points, or 0.3%, the S&P 500 index closing down 0.11%, the Nasdaq Composite index closing down 0.68% and the Russell 2000 index closing up 0.06%.

There was $487 million on the tape about one hour before the market close with Shockwave’s convertible notes dominating activity.

While the broader market was flat, the new notes jumped on an outright and dollar-neutral basis.

Air Transport Services Group Inc.’s 3.875% convertible notes due 2029 remained active with the notes coming in slightly after the strong gains of the previous session.

Outside of new issues, Amyris, Inc.’s 1.5% convertible notes due 2026 continued to whirl in a flurry of activity with the notes trading for pennies on the dollar following its bankruptcy filing.

Shockwave in demand

Shockwave Medical priced an upsized $650 million in five-year convertible notes after the market close on Thursday at par at the rich end of talk with a coupon of 1% and an initial conversion premium of 30%.

Price talk was for a coupon of 1% to 1.5% and an initial conversion premium of 25% to 30%.

The greenshoe was also upsized to $100 million.

The initial size of the offering was $500 million with a greenshoe of $75 million.

The strong demand for the notes during bookbuilding followed them into the secondary space with the notes jumping on debut.

The 1% notes traded up to 102.375 out of the gate and continued to climb as the session progressed.

They were changing hands at 103.125 about one hour into the session and were marked at 103 versus a stock price of $224.65 in the late afternoon.

The notes expanded about 2.5 points dollar-neutral early and continued to add to their gains with the notes poised to close the day with a 3-point expansion, sources said.

“This was a deal well done,” a source said.

“It had all the right pieces,” another source said.

While the coupon was low, the deal had strong appeal for both hedge and outright accounts.

There was $162 million in reported volume.

Shockwave Medical stock traded to a low of $220.75 and a high of $227 before closing the day at $225.26, an increase of 1.31%.

Air Transport active

Air Transport’s 3.875% convertible notes due 2029 remained active on Friday with the notes coming in slightly after the strong gains made on their aftermarket debut.

The 3.875% convertible notes were down about 0.5 point outright with stock off 1%.

They were changing hands at 102.25 versus a stock price of $22.38 in the late afternoon, according to a market source.

The notes were slightly weaker on hedge, although they maintained the majority of the gains made the previous session.

There was $9 million in reported volume.

Air Transport stock traded to a high of $22.88 and a low of $22.38 before closing the day at $22.63, a decrease of 1.22%.

The 3.875% notes started strong in the aftermarket on Thursday with the notes rising 2 to 2.5 points dollar-neutral.

Amyris’ bankruptcy

Amyris’ 1.5% convertible notes due 2026 continued to trade in flurried activity with the notes trading for pennies on the dollar following the chemical company’s bankruptcy filing.

The notes stabilized on Friday with the notes wrapped around 7.5 in active trade.

There was $12 million in reported volume.

The notes dropped 9 points to the single digits on Thursday after the company announced its bankruptcy filing.

The news was not a surprise with the 1.5% notes trading below 20 since June.

While some may have been buying the notes like a lottery ticket, sources were not optimistic about the prospects of recovery.

“It’ll be a tough road to salvage anything out of those,” a source said.

Amyris announced the previous session that it had filed for bankruptcy protection.

In its petition, the company listed 1,000 to 5,000 creditors, $679.68 million in assets and $1.33 billion in debt, including $690 million of the 1.5% convertible notes, Prospect News reported.

Mentioned in this article:

Air Transport Services Group Inc. Nasdaq: ATSG

Amyris, Inc. Nasdaq: AMRS

Shockwave Medical Inc. Nasdaq: SWAV

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