Halozyme convertibles active on missed guidance, notes redemption; Live Nation comes in

By Abigail W. Adams

Portland, Me., Jan. 11 – The convertibles primary market remained dormant on Wednesday, a surprise to sources who had expected to see an active pipeline given the strong demand for new paper and the rally in equity markets.

Earnings season blackouts and anticipated volatility around the release of the Consumer Price Index report may be holding issuers back, sources said.

Meanwhile, the secondary space was active as equity markets extended their gains although all eyes will be on Thursday’s release of the CPI report to determine whether the rally will have staying power.

The Dow Jones industrial average closed Wednesday up 269 points, or 0.80%, the S&P 500 index closed up 1.28%, the Nasdaq Composite index closed up 1.76% and the Russell 2000 index closed up 1.04%.

There was $87 million in reported convertibles trading volume about one hour into the session and $582 million on the tape about one hour before the market close.

The secondary space remained well bid on Wednesday with accounts putting money to work.

Live Nation Entertainment, Inc.’s 3.125% convertible notes due 2029 continued to see heavy volume on their second day of trading.

While the notes continued to add on an outright basis, they were weaker on hedge.

The JPMorgan health care conference continued to generate news that moved the convertible notes in the biotech sector.

Halozyme Therapeutics Inc.’s 1% convertible notes due 2028 saw heavy volume as stock dived on forward guidance that missed expectations.

While the notes fell outright, they improved dollar-neutral on the move down.

Halozyme was also in the news for the redemption of its 1.25% convertible notes due Dec. 1, 2024.

Affirm Holdings Inc.’s 0% convertible notes due 2026 were on the rise in heavy volume on a strong day for some heavily beaten down growth stocks.

While volume in the name was light, Cutera Inc.’s 4% convertible notes due 2029 hit their lowest level since pricing in mid-December as stock hit a new all-time low.

Live Nation weakens

Live Nation’s 3.125% convertible notes due 2029 continued to see heavy volume their second day in the secondary space.

While the notes continued to add on an outright basis, they were weaker dollar-neutral.

The 3.125% notes gained about 0.75 point outright with stock “jumping all over the place,” a source said.

They were changing hands just shy of 103 versus a stock price of $72.48 in the late afternoon.

The notes contracted about 0.125 to 0.25 point on the move up, a source said.

There was $26 million in reported volume.

Live Nation’s stock traded to a low of $72.42 and a high of $74.02 before closing the day at $73.01, an increase of 0.62%.

While slightly weaker on hedge on Wednesday, the notes expanded about 2.5 points dollar-neutral on their aftermarket debut on Tuesday.

Halozyme in focus

Halozyme’s 1% convertible notes due 2028 saw heavy volume on Wednesday as stock dived after the company released weak guidance.

The 1% convertible notes were down about 7 points outright with stock off 10%.

The notes were seen at 110 versus a stock price of $49.81 early in the session, according to a market source.

They traded at 109.5 versus a stock price of $49.94 in the late afternoon.

The notes improved on hedge on the move down, a source said.

There was $15 million in reported volume.

Halozyme’s stock traded to a low of $48.97 and a high of $51.93 before closing the day at $50.56, a decrease of 9.23%.

Stock was under pressure after Halozyme issued revenue guidance that fell short of expectations.

The biopharmaceutical company announced Wednesday that it expects revenue of $815 million to $845 million in 2023 and earnings per share of $2.50 to $2.65.

Analysts were expecting revenue of $892.47 million on earnings per share of $2.90.

Halozyme also announced that it would redeem the remaining outstanding amount of its 1.25% convertible notes due 2024 on March 17.

The notes are convertible until their redemption date at a conversion price of $23.79 with the principal amount to be settled in cash and any excess to be settled in cash, shares or a combination of both.

Affirm rises

Affirm’s 0% convertible notes due 2026 were on the rise in heavy volume on a strong day for some badly battered growth stocks.

The 0% convertible notes rose 2.5 points outright.

They were wrapped around 59 in the late afternoon with the yield about 14.25%, a source said.

There was $14 million in reported volume.

While not equity sensitive, Affirm’s stock made strong gains on Wednesday to close the day at $11.32, an increase of 12.52%.

Cutera’s new low

While volume in the name was light, Cutera’s 4% convertible notes due 2029 hit their lowest outright level since pricing as stock continued its downward spiral.

The 4% convertible notes traded down to 81.75 on Wednesday, a source said.

They opened 2023 above par.

The 4% notes plunged outright as stock nosedived following the preliminary release of earnings earlier in the week.

Cutera’s stock hit a new 52-week low on Wednesday. It traded to a high of $29.34 and a low of $26.81 before closing the day at $27.79, a decrease of 6.84%.

Cutera priced a $120 million issue of the 4% notes at par in mid-December.

The notes outperformed their initial days in the market with the notes trading as high as 106 outright and expanding 3 to 4 points dollar-neutral.

Mentioned in this article:

Affirm Holdings Inc. Nasdaq: AFRM

Cutera Inc. Nasdaq: CUTR

Halozyme Therapeutics Inc. Nasdaq: HALO

Live Nation Entertainment, Inc. NYSE: LYV

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.