Morning Commentary: Alder ‘getting smoked’ on debut; three new deals to price after market close

By Abigail W. Adams

Portland, Me., Jan. 30 – Alder BioPharmaceuticals, Inc.’s recently priced 2.5% convertible notes due 2025 were “getting smoked” on their market debut on Tuesday, according to a market source.

The notes were “offered at par or below right out of the gate,” another source said. The new notes were trading in a range of 97.75 to 98.5 with stock down about 5%.

They appeared to be trading down dollar neutral in line with the stock move, a source said.

With a coupon of 2.5% and an initial conversion premium of 35%, Alder BioPharmaceuticals priced an upsized $250 million of seven-year notes at the rich end of revised price talk after the market close on Monday.

The revised price talk was for a coupon of 2.5% and an initial conversion premium of 30% to 35%, according to a market source.

The revised talk had in turn been moved richer from initial price talk for a coupon of 2.5% to 3% and an initial conversion premium of 27.5% to 32.5%.

Goldman Sachs & Co. LLC, Wells Fargo Securities LLC and Leerink Partners LLC are joint bookrunners for the registered offering, which carries an upsized greenshoe of $37.5 million.

The initial size of the deal was $200 million with a greenshoe of $30 million. The deal was “oversubscribed multiple times” during the bookbuilding process, a market source said.

As Alder BioPharmaceuticals’ new deal weakens in the secondary market, three new deals are in the works and are expected to price after the market close.

Endeavour Mining Corp. plans to price $300 million of five-year convertible notes after the market close on Tuesday with price talk for a coupon of 2.25% to 3% and an initial conversion premium of 32.5% to 37.5%, according to a market source.

Citigroup, Barclays and Societe Generale are joint bookrunners for the Rule 144A and Regulation S deal, which carries a greenshoe of $30 million.

JPMorgan Chase Financial Co. LLC plans to price $350 million of five-year cash-settled convertible notes linked to Voya Financial, Inc. stock after the market close on Tuesday with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 32.5% to 37.5%, according to a market source.

J.P. Morgan Securities LLC is the bookrunner for the offering.

In one of the largest deals of 2018, Western Digital Corp. plans to price $1 billion of six-year convertible notes after the market close on Tuesday with price talk for a coupon of 1% to 1.5% and an initial conversion premium of 40% to 45%, according to a market source.

BofA Merrill Lynch and JPMorgan are acting as lead bookrunners for the Rule 144A deal, which carries a greenshoe of $100 million.

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