Morning Commentary: Amphastar convertible offering eyed; secondary activity muted early

By Abigail W. Adams

Portland, Me., Sept. 12 – The convertibles primary market cooled its pace in the early days of the Sept. 11 week although it remained active with one deal on deck.

Amphastar Pharmaceuticals Inc. plans to price $300 million of long five-year convertible notes after the market close on Tuesday with price talk for a coupon of 1.5% to 2% and an initial conversion premium of 30% to 35%.

The deal was heard to be in the market with assumptions of 375 basis points over SOFR and a 40% vol., according to a market source.

The deal looked cheap and is expected to play to solid demand during book building.

While the primary market saw a relatively slow start to the week, more activity is expected with the calendar still robust.

Meanwhile, it was another quiet start to the day in the convertibles secondary space with equity markets mixed early in the session.

The Dow Jones industrial average was down 65 points, or 0.19%, the S&P 500 index was down 0.43%, the Nasdaq Composite index was down 0.65% and the Russell 2000 index was up 0.17% shortly before 11 a.m. ET.

There was $86 million in reported volume about one hour into the session although few names saw concentrated trading activity.

Envista Holdings Corp.’s 1.75% convertible notes due 2028 (Baa3) saw the heaviest volume early in the session with one $5 million plus trade on the tape.

The notes were relatively unchanged as they switched hands.

The 1.75% notes traded at 95.125 versus a stock price of $30.53 early in the session, according to a market source.

Envista’s stock was trading at $30.60, an increase of 0.36%, shortly before 11 a.m. ET.

Envista’s 1.75% convertible notes were a part of a wave of issuance in early August that underperformed in the secondary.

Sources attributed the underperformance to the tight pricing of the notes.

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