Insulet edges up after upsizing, pricing at rich end of talk; primary calendar builds

By Rebecca Melvin

New York, Sept. 4 – Insulet Corp.’s newly priced 0.375% convertibles added 0.25 point on an outright basis in trade early Wednesday and a full point on a swap basis after the deal was upsized to $700 million and priced at the rich end of talk late Tuesday, according to market sources.

The Insulet notes were quoted at 100.25 outright and 101 on swap versus a share price of $167.95. Shares of the Billerica, Mass.-based medical device maker were $163.21 last, which was down $4.73, or 2.8%, on the day.

The Insulet deal was upsized from an expected $660 million size. Talk was for a yield of 0.375% to 0.875% and an initial conversion premium of 30% to 35%.

In connection with the offering, the company entered into capped call transactions with certain counterparties. The strike price on those transactions was set at $335.90 per share, representing a premium from the issuer’s perspective of 100%.

Also in the primary market, convertibles players are waiting for deals to price from Zillow Group Inc., Okta Inc., Aerie Pharmaceuticals Inc. and Encore Capital Group Inc., which are expected to price after the market close. But pricing was not heard by Prospect News’ deadline.

All those deals were announced on Tuesday, the first trading day of the week after U.S. financial markets were closed on Monday in observance of Labor Day.

The financial markets reopened on Tuesday with a burst of activity not only in convertibles but also in U.S. investment-grade straight debt. There was a record number of issuers pricing deals on Tuesday in the straight market, a New York-based market source said.

Calendar builds

On Wednesday, three new deals joined the convertibles calendar. They included NextEra Energy Partners, LP, which was pricing $1.5 billion of 4.872% three-year mandatory convertible equity units with a 25% initial conversion premium.

The deal was pricing on an overnight basis, with the units, which have a $50 par, being reoffered at $49 to $49.25.

Barclays, Goldman Sachs and Credit Suisse are joint bookrunners of the Securities and Exchange Commission registered deal.

Proceeds are earmarked for general corporate purposes.

NextEra Energy Partners is a Juno Beach, Fla.-based limited partnership formed by NextEra Energy Inc. to own, operate and acquire clean energy projects.

The other deals were from issuers Talend SA and Invitae Corp.

Talend planned to price up to $200 million of convertible senior notes due 2024 in a Rule 144A private offering to qualified institutional buyers.

The deal was being talked at a coupon of 1.75% to 2.25% and an initial conversion premium of 37.5% to 42.5%.

The notes were being sold via JPMorgan as bookrunner and have a $30 million greenshoe.

The securities are non-callable for three years, with a soft-call thereafter at a 130% price hurdle.

The deal was expected to price after the market close on Thursday.

Invitae plans to use the net proceeds to repay, including a prepayment premium, the $75 million of notes outstanding under its 2018 note purchase agreement and for international expansion, infrastructure investment, working capital and other general corporate purposes. Invitae may also use a portion of the proceeds to acquire or invest in complementary businesses, assets or technologies.

Conversions will be settled in cash, common shares or a combination thereof.

The San Francisco-based company provides genetic testing.

Talend plans up to €125 million of convertible senior notes due 2024 in a Rule 144A private offering to qualified institutional buyers, according to a news release.

The deal carries an €18.75 million greenshoe.

The deal was talked at 1.25% to 1.75%, with an initial conversion premium of 47.5% to 52.5%.

Morgan Stanley is the active bookrunner.

The notes are non-callable for three years and then provisionally callable for two years at a price hurdle of 130% with a make-whole table.

Talend plans to use the net proceeds for working capital and other general corporate purposes, which may include capital expenditures, potential acquisitions and strategic transactions.

Conversions will be settled in cash, ordinary shares or a combination thereof.

The Redwood City, Calif., company offers a software platform that integrates data and applications in real time across modern big data and cloud environments, as well as traditional systems, allowing organizations to develop a unified view of their business and customers.

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