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Morning Commentary: New Aegerion adds despite weaker shares; planned Ligand looks cheap
By Rebecca Melvin
New York, Aug. 12 – Aegerion Pharmaceuticals Inc.’s newly priced 2% convertibles edged up in early trade on Tuesday even though the underlying shares remained weak after the Cambridge, Mass.-based biopharmaceutical company priced an upsized $300 million of the senior notes at the rich end of talk.
The deal was initially talked at $250 million in size.
The new Aegerion bond was quoted at 100.5 bid, 101 offered on an outright basis with the underlying shares down about 0.8% at $30.26. On swap, the bonds were called 100.75 bid, 101.25 offered with the underlying shares at $30.26, a syndicate source said.
Earlier, when the shares were lower by as much as 2%, the bonds were 99.5 bid, 100 offered, the syndicate source said.
Three other deals are waiting in the wings for pricing after the market close on Tuesday. Sources said Ligand Pharmaceuticals Inc.’s $225 million of five-year convertibles look pretty cheap. But valuation for the Ligand deal, talked to yield 0.5% to 1% with an initial conversion premium of 32.5% to 37.5%, is very sensitive to volatility, a Connecticut-based source noted. If using a 45% vol., the deal is 3.5% cheap, and if using 40% vol., the deal is 0.8% cheap, the source said.
EnerNOC Inc.’s $130 million of five-year convertible senior notes was also seen to be cheap. The deal is talked to yield 2% to 2.5% with a premium of 32.5% to 37.5%. An earlier story on EnerNOC that appeared in Tuesday’s Prospect News Convertibles Daily misreported the coupon talk.
Also pricing after the market close is Apollo Commercial Real Estate Finance Inc.’s $100 million add-on to its 5.5% five-year convertible senior notes.
Back in established issues, the convertibles of Electronic Arts Inc. were seen 0.5 point better as the company announces a new business plan, and the Yandex NV convertibles were a point lower as Russian names fall out of favor, a New York-based trader said.
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