Wayfair’s new 0.375% convertibles trade up in heavy volume; Workday on tap; Teva firm

By Stephanie N. Rotondo

Seattle, Sept. 12 – A new convertible bond issue from Wayfair Inc. was taking up the bulk of trading on Tuesday.

A trader said there was “super heavy volume” in the new 0.375% convertible notes due 2022.

He pegged the paper around 104.625 to 104.875 toward the end of the day. That compared to a 104 to 104.125 context at mid-morning, which compared to the issue price of par.

The company’s stock was also faring well, rising $5.30, or 6.88%, to $82.38.

Late Monday, the Boston-based home décor online retailer said it had sold $375 million of the convertibles at par with an initial conversion premium of 35%.

The Rule 144A deal was increased from an expected $300 million. Initial price talk was for a 0.625% to 1.125% yield and an initial conversion premium of 32.5% to 37.5%.

Goldman Sachs & Co. and Citigroup Global Markets Inc. ran the books.

Meanwhile, the market was also waiting for Workday Inc. to price its proposed $1 billion offering of five-year convertible senior notes.

The deal was announced after the close on Monday. Price talk is for a 0% to 0.5% yield and an initial conversion premium of 35% to 40%, a market source reported.

Morgan Stanley & Co. LLC and BofA Merrill Lynch are running the books.

Pricing details were still not available as of 6:45 p.m. ET.

Ahead of pricing, the company’s existing convertible issues were in play.

A market source saw the 1.5% convertible notes due 2020 trading with a 141 handle late in the day. He said that was “down, obviously, with the stock being down.”

The 0.75% convertible notes due 2018 were meantime deemed down at 131.75 bid, 132 offered.

As for the company’s underlying stock, it was off $1.29, or 1.19%, at $106.98.

The company plans to use proceeds from the new issue to repay or repurchase its older convertible debt issues.

Away from the new issues, Teva Pharmaceutical Industries Ltd.’s convertibles were once again on this rise, this time on news of an asset sale.

The Israeli-based generic drug manufacturer’s debt had also improved on Monday after the company announced it had hired a new chief executive officer.

Elsewhere in the pharmaceutical realm, Intercept Pharmaceuticals Inc.’s 3.25% convertible senior notes due 2023 were under pressure after the company issued a “Dear Doctor” letter on its website.

Teva trades up

Teva Pharmaceutical’s 0.25% convertible notes due 2026 were again firm on Tuesday as the company reported it was selling its contraceptive device business to Cooper Cos. for $1.1 billion.

A trader placed the debt in a 91.75 to 92 range.

The company’s stock also got a nice pop, adding 83 cents, or 4.49%, to close at $19.33.

Teva’s Paragard is technically part of the company’s women’s health unit, which it has been in the process of selling, either in whole or by piecemeal. The device generated revenue of $168 million for the 12-month period ended June 30.

The sale is part of the company’s plan to generate $2 billion from asset sales.

The news gave Teva a second consecutive day of gains. On Monday, the company said it had hired Kare Schultz as president and CEO after an arduous search.

Schultz will replace Yitzhak Peterburg, who has been interim CEO since Erez Vigodman departed the post in February.

Previously, Schultz was president and CEO of H. Lundbeck A/S, which he helmed as the company was facing the loss of critical patents. He was also the former chief operating officer of Novo Nordisk A/S.

Intercept declines

Intercept Pharmaceuticals’ 3.25% convertibles were trending lower with the stock on Tuesday after the company posted a “Dear Doctor” letter on its website.

Toward the bell, a trader pegged the notes at 93.875.

That was down from 94.75 at mid-morning.

Another market source called the issue down 4 points at 95.5.

The company’s equity dropped $15.36, or 13.54%, to $98.12.

In its letter to medical professionals, Intercept urged doctors to strictly adhere to dosing guidelines given for its product Ocaliva, which is a treatment for a rare liver disease.

At the Morgan Stanley 15th Annual Global Healthcare Conference, Mark Pruzanski, president and CEO, spoke more about the letter, explaining that the company had evidence that some doctors were not abiding by the dosage guidelines, which had resulted in negative outcomes for those patients.

However, Pruzanski was quick to assure conference attendees that the drug was quite safe, if properly prescribed and used.

Still, the news isn’t ideal, given that about six weeks ago, the company was informed that a patient participating in a phase 2 NASH trial had died while taking Ocaliva. Even though an independent investigation revealed that the drug was not the cause, the company’s stock took a hit anyway.

Mentioned in this article:

Intercept Pharmaceuticals Inc. Nasdaq: ICPT

Teva Pharmaceutical Industries Ltd. NYSE: TEVA

Wayfair Inc. NYSE: W

Workday Inc. NYSE: WDAY

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