Morning Commentary: Bread Financial, Ventas Realty offerings eyed; Ionis gains on debut

By Abigail W. Adams

Portland, Me., June 8 – It was a backloaded week for the convertibles primary market with two new deals set to price after the market close on Thursday after one deal cleared the market the previous session.

Ventas Realty, LP is on deck with a $500 million offering of three-year notes exchangeable for parent company Ventas Inc.’s common shares and Bread Financial Holdings Inc. with a $275 million offering of five-year convertible notes.

The overnight offerings were unleashed the day after Ionis Pharmaceuticals Inc. priced its offering of $500 million five-year convertible notes.

While the primary market saw a lull as markets awaited a resolution to the debt-ceiling debacle, issuers were beginning to bring a backlog of refinancing deals to the market.

The convertibles secondary space saw an uptick of activity as the first new paper since May 25 made its aftermarket debut.

The new paper hit the secondary space on another mixed open for equities with the Dow Jones industrial average up 71 points, or 0.21%, the S&P 500 index up 0.28%, the Nasdaq Composite index up 0.56% and the Russell 2000 index down 0.84% shortly before 11 a.m. ET.

There was $132 million in reported volume about one hour into the session with Ionis’ convertible notes accounting for nearly one-half of the activity in the space.

Ionis’ new notes were putting in a solid aftermarket performance with the notes up on an outright and dollar-neutral basis.

Ventas exchangeables eyed

Ventas plans to price a $500 million offering of three-year exchangeable notes after the market close on Thursday with price talk for a coupon of 3.25% to 3.75% and an initial exchange premium of 22.5% to 27.5%.

The deal was heard to be in the market with assumptions of 175 basis points over SOFR and a 24% vol.

Bread Financial eyed

Bread Financial plans to sell $275 million of five-year convertible notes after the market close on Thursday with price talk for a coupon of 4.25% to 4.75% and an initial conversion premium of 20% to 25%.

The deal was heard to be in the market with assumptions of 850 bps over SOFR and a 40% vol.

Using those assumptions, the deal looked 2.75 points cheap at the midpoint of talk, a source said.

With a good borrow on the stock and a hefty coupon, the deal is expected to do well.

Ionis gains on debut

Ionis priced $500 million of five-year convertible notes after the market close on Wednesday at par with a coupon of 1.75% and an initial conversion premium of 32.5%.

Pricing came at the midpoint of talk for a coupon of 1.5% to 2% and at the rich end of talk for an initial conversion premium of 27.5% to 32.5%.

The deal was wall-crossed and covered at launch with proceeds used to refinance the biotech’s 0.125% convertible notes due 2024.

Ionis entered into privately negotiated transactions to repurchase for cash $434.1 million in principal of its 0.125% convertible notes due 2024 for $420.4 million.

The buyback price was 96.7947, a source said.

Ionis’ new 1.75% notes were putting in a strong performance in the aftermarket with the notes rising on an outright and dollar-neutral basis.

The notes were changing hands at 100.875 versus a stock price of $40.34 early in the session, according to a market source.

There was $51 million in reported volume.

Ionis’ stock wavered between gains and losses early in the session and was changing hands at $40.67, an increase of 0.32%.

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