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Morning Commentary: Esperion upsizes convertibles; trading muted; Square in focus
By Abigail W. Adams
Portland, Me., Nov. 12 – Thursday opened with more new convertible paper entering the space in a high-volume week for primary market activity.
Esperion Therapeutics Inc. priced an upsized $250 million five-year convertible notes after the market close on Wednesday at par at the cheap end of talk with a coupon of 4% and an initial conversion premium of 20%.
Price talk was for a coupon of 3.5% to 4% and an initial conversion premium of 20% to 25%, according to a market source.
The initial size of the offering was $200 million.
Trading activity in the new paper was light and is expected to remain that way due, in large part, to the forward stock purchase transaction.
With the borrow on the stock difficult, the company used $55 million of net proceeds to enter into a forward stock purchase agreement with the underwriter to help facilitate hedging activity.
“That kind of thing limits trading,” a source said. “Hedgers have to stick with the underwriter to trade it.”
While secondary activity in the name was light, the new paper was trading up on an outright basis with stock up early in the session.
The 4% convertible notes due 2025 traded up to 100.75 with about $2.5 million in reported volume, a source said.
Esperion’s stock was changing hands at $27.85, an increase of 0.98%, shortly before 11 a.m. ET.
Meanwhile, Square Inc.’s newly priced convertible notes remained in focus with the notes active as stock dipped early in the session.
Square’s 0% convertible notes were changing hands at 101.25 early in the session with about $20 million in reported volume, a source said.
The 0.25% convertible notes due 2027 were changing hands at 100.375 with about $8 million in reported volume.
Square’s stock was changing hands at $181.80, a decrease of 0.93%, shortly before 11 a.m. ET.
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