Morning Commentary: ConMed convertibles hit the market, expand; Western Digital active

By Abigail W. Adams

Portland, Me., Jan. 25 – Friday opened with new paper from ConMed Corp. hitting the secondary space.

ConMed priced an upsized $300 million of five-year convertible notes after the market close on Thursday at the rich end of talk at par with a coupon of 2.625% and an initial conversion premium of 27.5%.

Price talk was tightened during bookbuilding to a coupon of 2.625% to 2.875% and an initial conversion premium of 27.5%, according to a market source.

Initial price talk was for a coupon of 2.875% to 3.375% and an initial conversion premium of 22.5% to 27.5%, according to a market source.

The greenshoe was also upsized to $45 million.

The initial size of the deal was $275 million with a greenshoe of $41.25 million.

The new paper was in focus in the secondary space and was expanding on debut, despite pricing through the initial price talk, a market source said.

ConMed’s 2.625% convertible notes were trading between 101.5 and 102 early in Friday’s session with stock largely flat, the source said.

ConMed stock was $69.86, an increase of 0.30%, shortly before 11 a.m. ET.

Outside of the new paper, Western Digital Corp.’s 1.5% convertible notes due 2024 were again active in the secondary space with the notes lifted as stock surged early Friday, despite an earnings miss.

The 1.5% convertible notes traded just shy of 86 in high-volume activity on Friday.

Western Digital stock traded up to $42.85, an increase of 6.74%, shortly before 11 a.m. ET.

Western Digital reported non-GAAP earnings per share of $1.45, which fell short of analyst expectations for earnings per share of $1.49.

Revenue also missed with a reported $4.23 billion in the second quarter versus analyst expectations for revenue of $4.25 billion.

However, stock jumped on news the company expected increased revenue in the second quarter. The fundamentals of the company were looking stronger, a market source said.

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