Integra LifeSciences convertible notes in focus on product recall; Welltower below par

By Abigail W. Adams

Portland, Me., May 23 – The convertibles primary market remained dormant on Tuesday with prospects for new deal activity diminishing.

The secondary space also remained somewhat sluggish as selling pressure set in for equities with U.S. debt ceiling negotiations at an impasse.

Equity indexes closed Tuesday in the red after a mixed start to the session with the Dow Jones industrial average down 231 points, or 0.69%, the S&P 500 index down 1.12%, the Nasdaq Composite index down 1.26% and the Russell 2000 index down 0.43%.

There was $70 million in reported convertibles trading volume about one hour into the session and $381 million on the tape about one hour before the market close.

While investment-grade issues remained the general focus of trading activity, topical news pushed outstanding issues into the spotlight.

Integra LifeSciences Holdings Corp.’s 0.5% convertible notes due 2025 saw heavy volume on Tuesday as stock dived double digits after the company issued a recall for all products produced at one of its facilities.

Welltower Inc.’s 2.75% convertible notes due 2028 (Baa1/BBB+) were again lower in active trade with the notes closing the day below par.

CMS Energy Corp.’s 3.375% convertible notes due 2028 (Baa2) also returned to focus although with little movement in price.

Integra’s recall

Integra’s 0.5% convertible notes due 2025 were the name of the day on Tuesday as stock nosedived with the company issuing a recall.

The 0.5% notes fell about 4 points outright with stock off almost 20%.

The notes were changing hands at 90.875 early in the session and continued to move lower as the session progressed. They were seen at 89.75 in the late afternoon, according to a market source.

There was $29 million in reported volume.

Integra’s stock traded to a low of $39.78 and a high of $46 before closing at $40.48, a decrease of 20.19%

Stock nosedived after the medical device manufacturer issued a recall for all products made at its Boston facility from March 1, 2018 to May 22, 2023.

The recall is expected to result in an impairment charge of $22 million to be recorded in the second quarter, the company said in a press release.

The company issued revenue guidance of $372 million to $376 million and adjusted EPS of 55 cents to 59 cents for the second quarter.

Welltower below par

Welltower’s 2.75% convertible notes due 2028 were again lower in active trade on Tuesday.

The 2.75% notes dropped about 0.5 point outright with the notes again falling below par.

The notes were changing hands at 99.75 in the late afternoon.

There was $14 million in reported volume.

Welltower’s stock traded to a low of $76.09 and a high of $77.32 before closing at $76.17, a decrease of 0.42%.

The 2.75% notes dropped below par in intraday activity on Monday but fought back to close the day above.

Tuesday’s trading level marked the lowest for the notes since the $1.04 billion issue priced at par on May 8.

CMS Energy active

CMS Energy’s 3.375% convertible notes due 2028 were active on Tuesday although with little movement in price.

While there were some odd-lot prints below par, the 3.375% notes continued to trade between par and 100.25 throughout the session, a source said.

There was $25 million in reported volume.

CMS’ stock traded to a low of $58.53 and a high of $59.52 before closing at $58.63, down 0.46%.

Mentioned in this article:

CMS Energy Corp. NYSE: CMS

Integra LifeSciences Holdings Corp. Nasdaq: IART

Welltower Inc. NYSE: WELL

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