Morning Commentary: Supernus prices rich, expands on debut; Zendesk, Live Nation on tap

By Abigail W. Adams

Portland, Me., March 15 – The convertibles primary market has been bringing forward new deals “fast and furious,” a market source said, with a $350 million deal pricing prior to the market open on Thursday and $1 billion in new deals expected to price after the market close.

Supernus Pharmaceuticals, Inc. priced $350 million of five-year convertible notes prior to the market open on Thursday with a coupon of 0.625% and an initial conversion premium of 37.5%.

Pricing came richer than price talk for a coupon of 0.75% to 1.25% and at the rich end of talk for an initial conversion premium of 32.5% to 37.5%, according to a market source.

“There was a ton of demand,” a market source said.

The 0.625% notes expanded 3 points on a dollar-neutral basis on their secondary market debut, the source said. They were seen at 103.75 bid, 104.25 offered with stock at $43.90 early in the session.

In connection with the offering, the Rockville, Md.-based specialty pharmaceutical company entered into convertible note hedge and warrant transactions with a strike price of $80.91, representing a premium of 87.5% from the company’s perspective, according to a company news release.

While new paper from Supernus made their secondary market debut, the primary market was busy preparing two new deals.

Zendesk, Inc. plans to price $500 million of five-year convertible notes after the market close on Thursday with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 25% to 30%, according to a market source.

The deal is being marketed with a credit spread of 250 bps over Libor and a 38% vol., a market source said.

Live Nation Entertainment, Inc. plans to price $500 million of five-year convertible notes after the market close on Thursday with price talk for a coupon of 2.25% to 2.75% and an initial conversion premium of 47.5% to 52.5%, according to a market source.

The convertible notes are being offered concurrently with a $300 million offering of senior notes due 2026 with initial talk for a coupon in the 5.75% area, Prospect News reported.

Proceeds from the offerings will be used to repurchase the company’s 2.5% convertible notes due 2019 from time to time and for general corporate purposes, according to a company news release.

Live Nation’s 2.5% convertible notes due 2019 were seen trading at 132.625 versus a stock price of $44.60.

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