Tesaro convertibles add outright, dollar neutral on debut; SolarCity stock up on new deal

By Rebecca Melvin

New York, Sept. 24 – Tesaro Inc.’s newly priced 3% convertible bonds added on their first day of trading Wednesday after the Waltham, Mass.-based biopharmaceutical oncology company priced an upsized $175 million of the seven-year notes at the cheap end of talk. Shares, which fell 9% on Tuesday after the deal was launched, were slightly weaker early Wednesday before ending in positive territory by 1 cent.

The new Tesaro bonds were about 102 with the stock around $26.00. That was up 1 point to 1.25 points on a dollar-neutral basis, a syndicate source said.

There was “healthy, two-way flow, with better buying interest as the morning progressed,” the source said.

Market players were also sizing up the planned SolarCity Corp. deal, which launched after the market close Tuesday. SolarCity’s $500 million offering of five-year convertible bonds was being valued by the underwriters using a credit spread of 465 basis points over Libor and a 42% vol.

SolarCity shares surged in the early going Wednesday, trading higher by $4.48, or 7.4%, to $64.92. But they pulled back to a 4.4% gain at $63.04 by the close.

SolarCity’s existing 2.75% convertibles traded higher on an outright basis but lower on swap.

One notable name was SunEdison Inc. All three of its convertible bonds traded Wednesday and were higher both on an outright basis and on swap as shares of the St. Peters, Mo.-based solar technology company gained 5% amid ongoing takeout chatter.

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