Zogenix convertibles on tap; SolarEdge, Omnicell offerings eyed; Aerojet notes active

By Abigail W. Adams

Portland, Me., Sept. 22 – The convertibles primary market returned to action on Tuesday with three deals totaling $1.2 billion on deck.

Zogenix Inc. plans to price $200 million of seven-year convertible notes after the market close on Wednesday with price talk for a coupon of 2.25% to 2.75% and an initial conversion premium of 30% to 35%, according to a market source.

BofA Securities Inc., SVB Leerink LLC, Stifel, Nicolaus & Co. Inc. and Cantor Fitzgerald & Co. are joint bookrunners for the Rule 144A deal, which carries a greenshoe of $30 million.

SolarEdge Technologies Inc. plans to price $500 million of five-year convertible notes and Omnicell Inc. plans to sell $500 million of five-year convertible notes after the market close on Tuesday.

The offerings looked “numerically attractive,” a source said.

The deals played to heavy demand during bookbuilding with both believed to be pricing through the rich end of talk, a source said.

Meanwhile, the secondary space was firmer on Tuesday as equity markets recovered from Monday’s sell-off.

Aerojet Rocketdyne Holdings Inc.’s 2.25% convertible notes due 2023 were again active with the notes seeing high volume over the past two sessions.

Shopify Inc.’s 0.125% convertible notes due 2025 continued their upward momentum.

SolarEdge on tap

SolarEdge plans to price $500 million of five-year convertible notes after the market close on Tuesday with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 42.5% to 47.5%.

The deal was heard to be in the market with assumptions of 300 basis points over Libor and a 40% vol.

Sources pegged the deal between 2 to 3 points cheap at the midpoint of talk.

The offering was heard to be in demand during bookbuilding with books closing early.

Pricing was going to come through the rich end of talk, a source said.

The convertible notes from the first-time issuer are going to be index eligible, which helped spur demand, a source said.

Omnicell to price

Omnicell plans to price $500 million of five-year convertible notes after the market close on Tuesday with price talk for a coupon of 0.25% to 0.75% and an initial conversion premium of 30% to 35%.

The deal was heard to be in the market with assumptions of 350 bps over Libor and a 35% vol.

Using those assumptions, the deal looked about 2 points cheap at the midpoint of talk.

While the company did not have the best volatility in its stock, the medication management company is a solid credit with good cash flow, a source said.

The deal was also in demand during bookbuilding with books closing in the early afternoon.

Pricing was believed to be coming through the rich end of talk.

The convertible notes will also be index eligible, a source said.

Aerojet active

Aerojet Rocketdyne’s 2.25% convertible notes due 2023 were active on Tuesday, which was a continuation of trading activity that began in the late afternoon on Monday, a source said.

The 2.25% notes were changing hands at 160.25 shortly after the opening bell on Tuesday.

The 2.25% notes also saw a large chunk trade at that level in the late afternoon on Monday with more than $40 million of the bonds changing hands, a source said.

The notes mostly trade on swap.

Aerojet’s stock was on the rise on Tuesday even with its industry peers trading off.

Stock traded to a high of $43.47 and a low of $40.13 before closing the day at $43.11, an increase of 7.27%.

The notes become callable in December provided stock remains above 150% of the conversion price of $26.00.

The pending callability of the bonds may be the reason for the sudden activity in the name, a source said.

Shopify gains continue

Shopify’s 0.125% convertible notes due 2025 continued their upward momentum on Tuesday.

The notes were up another 2 points outright to 109 in the late afternoon.

They expanded another 0.5 point dollar-neutral, a source said.

Shopify stock traded to a low of $904.72 and a high of $956.86 before closing the day at $954.25, an increase of 2.96%.

The notes are being monitored for their potential addition to the Refinitiv Convertible Indices.

While the issue meets the minimum size criteria for addition to the index, it has not yet met the liquidity criteria.

Mentioned in this article:

Aerojet Rocketdyne Holdings Inc. NYSE: AJRD

Omnicell Inc. Nasdaq: OMCL

Shopify Inc. NYSE: SHOP

SolarEdge Technologies Inc. Nasdaq: SEDG

Zogenix Inc. Nasdaq: ZGNX

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