Tilray convertibles trade actively; oil and technology names in focus; U.S. Steel on tap

By Rebecca Melvin

New York, Oct. 15 – Tilray Inc.’s convertibles topped the most actively traded list of issues on Tuesday as shares of the Canadian pharmaceutical and cannabis company recovered some ground following their most recent slide last week.

Both the Tilray stock and the bonds have slid precipitously over the past year since shares stood at $148.30 on Oct. 12, 2018. There was another noticeable bump lower last week. But on Tuesday, the shares closed up 7% on the day at $22.12, and Tilray’s 5% convertibles due 2023, which priced a year ago when shares were at their peak, changed hands at 55.

Tilray has suffered the same treatment at the hands of investors as many companies in the marijuana space, where euphoria about the loss-making companies’ prospects drove prices up hard, only to have them drop back hard as well.

In the convertibles market, where the primary market continued to remain quiet after a silent week last week, other actively traded issues in the secondary were those of companies in the oil and technology sectors, among others.

After the market close, United States Steel Corp. launched a deal for $300 million of seven-year convertibles set to price after the close on Wednesday.

The convertibles were talked at a coupon of 4% to 4.5% and an initial conversion premium of 27.5% to 32.5%. The Rule 144A offering has a $50 million greenshoe.

The primary has been quiet this month amid blackout periods for companies ahead of earnings reports and following a record for issuance in a single month in September.

Oil and gas drilling contractor Nabors Industries Ltd.’s convertibles traded actively against shares that were unchanged on the day. The Nabors 0.75% notes due 2024 were at 61.25. Transocean Ltd.’s 0.5% convertibles due 2023 traded at 81, with shares up 1.7% at $4.72, and the Weatherford International Ltd.’s 5.875% exchangeable notes due 2021 were on the tape at 32. The Weatherford exchangeables were at one point atop the most actively traded issues on Tuesday, with some $5.7 million of bonds having changed hands in the early going.

West Texas Intermediate crude oil for front month delivery was down more than 1% at $52.88 on Tuesday. But the bankrupt oilfield services company, based in Baar, Switzerland, has had a couple of positive headlines in recent days, including word of three new contracts for oil fields inked with Iraq and a company news release on Monday detailing an opportunity to showcase its oilfield technologies at the Kuwait Oil & Gas Show and Conference being held Oct. 13-16.

Weatherford filed for Chapter 11 bankruptcy protection from creditors on July 1. The pre-packaged plan included a $1 billion DIP term loan. The company’s existing secured debt and unsecured revolving credit facility debt will be repaid in full in cash upon exit from bankruptcy. Existing equity will be canceled and exchanged for 1% of the new common stock in the reorganized company and warrants for additional stock will be issued.

There were several chip names in trade in convertibles as the sector’s stocks rallied. The Philadelphia Semiconductor Sector was up 2.2% on the day. ON Semiconductor Corp.’s convertible notes gained in tandem with higher shares. The ON 1.625% convertible notes due 2023 traded at 121.8, which was up from 119.5 on Monday, according to Trace data, with shares up 3%.

Inphi Corp.’s 0.75% convertibles due 2021 changed hands at 130 on Tuesday, which was up from 127 on Monday, with shares of the Westlake Village, Calif.-based semiconductor maker up nearly 4% in the early going.

NXP Semiconductors NV, which has been an active name, given the upcoming maturity of the 1% convertibles due Dec. 1, 2019, was also seen in trade. Those bonds were up on the day at 110.

Akamai Technologies Inc., a Cambridge, Mass.-based cloud computing company, also saw notable action in the convert space on Tuesday as both the Akamai 0.125% convertibles due 2025 and the 0.375% convertibles due 2027 were trading. Those bonds were up 1.6 points and 0.9 point, respectively, at 114.85 and 102.25, as shares lifted $1.49, or 1.7%, to $91.33.

Among mandatory issues, NextEra Energy Inc.’s 4.872% bonds were the most active. But activity was pretty light overall, a New York-based market source said.

In the early going, “bonds are quiet,” the source said, as earnings season got underway in earnest with mixed results from the big banks.

JPMorgan Chase beat estimates, but Goldman Sachs Group reported a drop in earnings and missed estimates.

Mentioned in this article:

Akamai Technologies Inc. Nasdaq: AKAM

Inphi Inc. Nasdaq: IPHI

Nabors Industries Ltd. NYSE: NBR

NextEra Energy Inc. NYSE: NEE

ON Semiconductor Corp. Nasdaq: ON

Tilray Inc. Nasdaq: TLRY

Transocean Ltd. NYSE: RIG

United States Steel Corp. NYSE: X

Weatherford International Ltd. OTC: WFTIQ

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