Morning Commentary: Intercept Pharmaceuticals offering eyed; Infinera tanks on earnings

By Abigail W. Adams

Portland, Me., May 9 – Despite the continued choppiness in the markets on renewed trade tensions between the United States and China, a new convertibles deal was in the works.

Intercept Pharmaceuticals Inc. plans to price $200 million of seven-year convertible notes after the market close on Thursday with price talk for a coupon of 1.5% to 2% and an initial conversion premium of 30% to 35%, according to a market source.

The deal was heard to be in the market with a credit spread of 500 basis points over Libor and a 45% vol., according to a market source.

Sources pegged the deal about 1.5 points cheap at the midpoint of talk.

The notes are pricing concurrently with a $200 million offering of common stock, which also carries a greenshoe of $30 million.

While Intercept’s new offering was in focus, the biotech company’s outstanding 3.25% convertible notes due 2023 were slow to trade with the bonds last seen changing hands around 93.5.

Meanwhile, Infinera Corp.’s 2.125% convertible notes due 2024 were tanking in active trading on Thursday after a mixed earnings report.

The 2.125% convertible notes dropped more than 10 points outright and were contracted 2 to 3 points dollar-neutral based on the hedge used, a market source said.

The notes were changing hands around 69 after previously trading at 80. Infinera stock was $3.30, a decrease of 25.45%, shortly before 11 a.m. ET.

The manufacturer of optical transmission equipment for the telecommunications market’s stock has taken a hit in the past year, losing almost two-thirds of its value since pricing its convertible notes offering in September 2018.

The company was continuing to take a hit after a first-quarter earnings report that beat on the bottom line but missed on the top.

Infinera reported losses per share of 23 cents versus analyst expectations for losses per share of 27 cents.

However, the company reported revenue of $292.7 million versus analyst expectations for revenue of $311.3 million.

Guidance for the current quarter also disappointed with projected revenue of $288 million to $308 million versus analyst expectations for revenue of $336.56 million.

© 2015 Prospect News.
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