Morning Commentary: Coherus, Dick’s Sporting Goods convertible notes expand on debut

By Abigail W. Adams

Portland, Me., April 15 – Two new deals hit the convertibles secondary space on Wednesday as equity markets opened in the red on weak earnings and economic data.

Dick’s Sporting Goods, Inc.’s newly priced 3.25% convertible notes due 2025 and Coherus BioSciences, Inc.’s 1.5% convertible notes due 2026 were in focus in the secondary space.

While both notes were largely wrapped around par on an outright basis, they were expanding dollar-neutral, a source said.

Dick’s expands

Dick’s Sporting Goods priced $500 million of five-year convertible notes after the market close on Tuesday at par at the rich end of talk with a coupon of 3.25% and an initial conversion premium of 35%.

Price talk was for a coupon of 3.25% to 3.75% and an initial conversion premium of 30% to 35%, according to a market source.

The new paper from the sporting goods retailer hit the secondary space as data showed the largest plunge in monthly retail sales on record – sales fell 8.7% in March, Bloomberg reported.

While Dick’s Sporting Goods stock was trading off, its 3.25% convertible notes due 2025 were holding at par, a market source said.

The notes were expanded about 2 points on a dollar-neutral, or hedged, basis, the source said.

Dick’s stock was changing hands at $25.18, a decrease of 3.93%, shortly before 11 a.m. ET.

Coherus expands

Coherus BioSciences priced $200 million of six-year convertible notes after the market close on Tuesday at par with a coupon of 1.5% and an initial conversion premium of 30%.

Pricing came at the rich end of tightened talk for a coupon of 1.5% to 1.75% and an initial conversion premium of 30%, according to a market source.

Initial price talk was for a yield of 1.75% to 2.25% and an initial conversion premium of 25% to 30%.

The new paper was trading above par with stock down more than 3% early in Wednesday’s session.

The notes were expanded about 2 points on a dollar-neutral basis, a source said.

Coherus stock was changing hands at $14.52, a decrease of 1.96%, shortly before 11 a.m. ET.

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