Morning Commentary: Global Blood Therapeutics convertibles rip on debut; Luminar crumbles

By Abigail W. Adams

Portland, Me., Dec. 15 – It was an active morning in the convertibles secondary space on Wednesday as $850 million in new supply entered the market.

Global Blood Therapeutics Inc. priced an upsized $300 million of seven-year convertible notes and Luminar Technologies Inc. sold an upsized $550 million of five-year convertible notes after the market close on Tuesday.

While both deals upsized, demand was heard to be tepid during bookbuilding with both offerings pricing on the cheaps.

The new paper moved in opposite directions in the secondary space with Global Blood Therapeutics ripping higher on debut but Luminar crumbling, sources said.

Outside of the new paper, the secondary space was quiet as equity benchmarks extended losses in the run-up to the Federal Reserve’s highly anticipated announcement on Wednesday.

The Dow Jones industrial average was down 95 points, or 0.28%, the S&P 500 index was down 0.19%, the Nasdaq Composite was down 0.48% and the Russell 2000 index was down 0.88% shortly before 11 a.m. ET.

Global Blood surges

Global Blood Therapeutics priced an upsized $300 million seven-year convertible notes after the market close on Tuesday at par at the cheap end of talk with a coupon of 1.875% and an initial conversion premium of 27.5%.

Price talk was for a coupon of 1.375% to 1.875% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

The greenshoe was also upsized to $45 million.

The initial size of the deal was $250 million with a greenshoe of $37.5 million.

The new paper ripped higher on debut.

The 1.875% convertible notes traded up to 109 on an outright basis and expanded 4 to 5 points dollar-neutral, sources said.

Global Blood’s stock was changing hands of $26.84, an increase of 7.77%, shortly before 11 a.m. ET.

Stock hit its 52-week low of $24.61 on Tuesday.

Luminar sinks

Luminar Technologies priced an upsized $550 million of five-year convertible notes after the market close on Tuesday at par at the cheap end of talk with a coupon of 1.25% and an initial conversion premium of 32.5%, according to a company news release and a market source.

Price talk was for a coupon of 0.75% to 1.25% and an initial conversion premium of 32.5% to 37.5%.

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

The new 1.25% notes “crumbled” on their aftermarket debut, a source said.

The notes traded down to 96 bid, 97 offered early in the session.

They contracted 1 point on a dollar-neutral basis.

Luminar’s stock traded down to $14, a decrease of 7.19%, shortly before 11 a.m. ET.

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