Endo, Gilead weaker; primary market sees Electronics For Imaging, Depomed, Clovis on tap

By Rebecca Melvin

New York, Sept. 2 – Amid a generally quiet U.S. convertibles market on Tuesday, there were a few deeper, in-the-money convertibles that felt “a little heavy,” a New York-based trader said.

After the session ended, the primary market restarted with vigor as three new issues launched. Through the day a handful of international deals were also announced.

Many market participants were still “out from the holiday,” one trader said of the session. So it was “relatively quiet.” Financial markets were closed Monday for the Labor Day holiday.

Among the in-the-money issues that traded were Endo International plc’s 1.75% convertibles and the Gilead Sciences Inc. D’s, or the 1.625% convertibles due 2016.

Both were a little lower on a hedged basis as outright participation was seen coming out of the names, a trader said.

The Endo convertibles were seen around 217, which was down about 0.25 point on a dollar-neutral, or hedged, basis.

Elsewhere, the convertibles of Tesla Motors Inc. and SanDisk Corp. traded in mixed action, a New York-based trader said.

Two of Tesla’s convertibles were better by about 0.25 point, the trader said. Shares of the Palo Alto, Calif.-based electric car maker were up.

The Tesla 0.25% convertibles due 2019, or the A tranche, were last seen at 102.19 on Tuesday, which was up from about 100.5 bid, 101.5 offered on Friday, according to Trace data.

Tesla’s 1.25% convertibles due 2021, or the B tranche, changed hands at 103 early Tuesday, which was up from 101.8 last on Friday, according to Trace.

SanDisk’s 1.5% convertibles due 2017 traded at 190.45, which was pretty much steady on levels Friday, when liquidity overall in the convertible market was low ahead of the holiday weekend.

In the primary market, London-based bank HSBC Holdings plc and Madrid-based Banco Santander SA were both involved in pricing of perpetual convertible preferred shares.

Fitch Ratings said it assigned HSBC Holdings’ upcoming issue an expected rating of BBB. The convertibles are additional Tier 1 instruments with fully discretionary interest payments and are subject to conversion into HSBC ordinary shares on breach of a consolidated 7% CRD IV common equity Tier 1 (CET1) ratio, which is calculated on a fully loaded basis.

Back in the United States, three deals for $730 million in base deal proceeds were launched for pricing after the market close Wednesday.

Electronics For Imaging Inc. launched a deal of $300 million of five-year notes; Depomed Inc. launched an offering of $230 million of seven-year convertible senior notes; and Clovis Oncology Inc. is pricing $200 million of seven-year convertibles.

Electronics For Imaging ahead

Fremont, Calif.-based Electronics For Imaging plans to price $300 million of five-year convertible senior notes after the market close Wednesday that were talked to yield 0.5% to 1% with an initial conversion premium of 25% to 30%.

Electronics For Imaging is a printing devices company, which will use proceeds mainly to repurchase stock and for potential acquisitions and strategic transactions.

Concurrently with the deal, the company is entering into convertible note hedge and warrant transactions, or a call spread.

The Rule 144A deal has a $45 million greenshoe and was being sold via Morgan Stanley & Co. LLC and Goldman Sachs & Co.

Depomed to price

Newark, Calif.-based Depomed is a specialty pharmaceutical company that commercializes products for pain and disorders of the central nervous system.

It is pricing $230 million of seven-year convertible senior notes that were talked to yield 2.625% to 3.125% with an initial conversion premium of 30% to 35%.

The registered, off-the-shelf deal has a $34.5 million greenshoe and was being priced by Morgan Stanley and RBC Capital Markets LLC, acting as joint bookrunners.

Depomed can call the notes for cash after five years on Sept. 5 provided shares rise to 130% of the conversion price.

There has contingent conversion at 130% as well.

Proceeds will be used for working capital and other general corporate purposes and potential acquisitions and strategic transactions.

Clovis Oncology to price

Boulder, Colo.-based Clovis Oncology is a biopharmaceutical company focused on acquiring, developing and commercializing anticancer agents.

The company is pricing $200 million of seven-year convertibles that were talked to yield 2.5% to 3% with an initial conversion premium of 32.5% to 37.5%.

The Rule 144A offering has a $30 million greenshoe and was being sold via J.P. Morgan Securities LLC and Credit Suisse Securities (USA) LLC.

The notes are non-callable for four years and then provisionally callable if shares exceed 150% of the conversion price through a make-whole.

Proceeds will be used for general corporate purposes, including funding Clovis development programs, payments of milestones under its license agreements, general and administrative expenses, acquisition or licensing of additional product candidates or businesses and working capital.

Mentioned in this article:

Banco Santander SA Madrid: SAN

Endo International plc Nasdaq: ENDP

Gilead Sciences Inc. Nasdaq: GILD

HSBC Holdings plc London: HSBC

SanDisk Corp. Nasdaq: SNDK

Tesla Motors Inc. Nasdaq: TSLA

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.